What happens if you inherit a property?

BY Ned Browne

22nd Apr 2023 Property

What happens if you inherit a property?
Inheriting a property can be bittersweet, but it’s important to understand the process 
Inheriting a property can be a bittersweet experience. Inheriting a loved one’s home can sit rather uncomfortably—there will be many associated memories. Then there’s the issue of controversial wills. It’s common for one or more parties to feel aggrieved.  But, putting these concerns to one side, it’s important to understand how the process works. 

Inheritance tax

You will only have to pay tax on the amount exceeding the tax-free threshold
According to Benjamin Franklin, “nothing is certain except death and taxes”. And it turns out that death and taxes go hand-in-hand too. The inheritance tax-free threshold is currently £325,000 (and has been for some time). Everything above that amount is taxed at 40%. With average property prices in the UK hovering around £295,000 (rising to slightly over £523,000 in London), many estates will be liable for inheritance tax. 
"With average property prices in the UK hovering around £295,000, many estates will be liable for inheritance tax"
Please note: no inheritance tax is payable if the entire estate of the deceased is bequeathed: 
  • To the spouse or civil partner of the person who died. 
  • To a charity or a community amateur sports club. 

Calculating the value of an estate 

As well as property, an estate includes any other assets that the deceased owned on the day they died
A deceased person’s estate is the combined value of the things the person owned (their assets) on the day they died. It also includes any gifts they made, such as cash or items of value, in the seven years before they died. Gifts made six to seven years before death are taxed at 8%. This rate rises gradually to gifts made less than three years before death, which are taxed at the full rate of 40% (Gifts made more than seven years before death are not subject to inheritance tax). 

The job of the executor 

Assuming the deceased has written a will, there will be at least one named executor (and a maximum of four). The executor is legally responsible for the money, property and possessions of the person who died.
"The executor is legally responsible for the money, property and possessions of the person who died"
They are responsible for the assets from the date of death until the date everything has been passed on to the beneficiaries. This is known as the “administration period”. During that time, the executor may have to do one or all of the following: 
  • Pay any debts left by the person who died. 
  • Sell assets such as properties or shares
  • Pay tax on any income the estate generates. 
  • Report the estate value, income and tax liability to HM Revenue and Customs
  • If there’s inheritance tax to pay, it needs to be paid within six months of the person’s death. 


Probate is the legal right to deal with someone's estate when they die. The executor of the will should not make any financial plans (or put property on the market) until they have been granted probate. Applying for probate is a reasonably straightforward process, and can be done online or by post. Google: “apply for probate UK” to find more details. 

The importance of writing a will 

Writing a will ensures a much simpler process for your family after you die
If you’re reading this article and don’t have an up-to-date will, we urge you to get one written. Unfortunately we’re all mortal, and if you die intestate (i.e. without a will) it will make your family’s life far more complex, especially if you have a range of assets. 

Can you always keep an inherited property? 

This depends on the value of the estate and your ability to pay any outstanding inheritance tax liability. So, for example, if the deceased had assets of less than £300,000 there would be no tax to pay. However, if the person’s assets were £600,000 the inheritance tax liability would be 40% of the taxable amount (i.e. £600,000-£354,000) which would come to £110,000. If you don’t have that amount in cash, and you want to keep the property, you may be able to get a mortgage to cover this tax bill. 
"If you do inherit a property, remember you are one of the privileged few"
These examples are simplified versions of reality. Real life is far more messy and complex. As such, if you are a named beneficiary, you should always seek legal advice

Be grateful 

No one should rely on inheritance. But, if you do inherit a property, remember you are one of the privileged few. And never forget the person whose property it once was. 
Image of a discount offer for a Which? will
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