What to do if your late loved one had a property to pass on, including mortgage and inheritance tax

• If your loved one has sadly died and they had property to pass on there are certain steps you must follow
• We’ve put together a simple guide to dealing with the process, plus where you can get more information
• Don’t forget to allow yourself time to grieve properly, and do seek legal advice

When someone you love dies, it can be a confusing time, with so much to deal with on top of the emotional turmoil.

With that in mind, we’ve put together a simple guide explaining what to do if your late loved one had property to pass on.

No need to rush

The first thing to remember is that when someone dies there’s usually no rush to sort out what happens with their property, so you can take your time to grieve.

It’s also a good idea to seek legal advice as the process can be quite complicated. The information below is just a basic guide.

When someone dies, if they owned a property then another person will inherit that property or share of the property, or it will be sold.

You’ll need to update the property records to show who now owns it, which you can do here.

What happens if the property was jointly owned?

If the property was owned jointly and the surviving partner wants to continue living there then you just need to notify HM Land Registry of the death.

If the partners were beneficial joint tenants at the time of the death, the surviving partner will automatically inherit their late partner’s share of the property.

If the partners were tenants in common, this is not automatically the case. Probate or letters of administration will be required so the share of the property can be passed to whoever is to inherit it, according to the will or, if there is no will, the rules of intestacy.

What if there’s a sole owner?

If the property is registered to a sole owner, then you need to get probate before it can be sold.

If the property is not already registered then it must be registered when transferring ownership.

A person inheriting the property is called the beneficiary.

If the property is passed to you and you plan to sell it then you will probably need the help of a conveyancer, a legal professional specialising in the transfer of property.

What if there’s a mortgage on the property?

If there is still an outstanding mortgage on the property, it will either have to be paid immediately or the person inheriting the property will be required to take over the mortgage.

There might be a life insurance policy, endowment policy or mortgage protection policy in place meaning the outstanding mortgage will be paid upon that person’s death.

If you are selling the property, the remaining balance of the mortgage will be paid out of the proceeds of the sale.

Will you need to pay inheritance tax?

If the person’s estate - everything they owned, including property - is valued at more than £325,000, the beneficiary or beneficiaries may have to pay inheritance tax.

If the person’s husband, wife or civil partner inherits the estate, there is no inheritance tax to pay.

If the person who died had an estate worth less than £2 million and they left their home to their children (including adopted, foster or stepchildren) or grandchildren, then an extra £175,000 is tax free.

If there is inheritance tax to be paid then some of this must be paid before probate or letters of administration is granted. The final tax bill will then be sorted out.

A solicitor will usually work out how much, if anything, is owed, but if you don’t have a solicitor you can ask HMRC directly.

You must pay inheritance tax by the end of the sixth month after the person died or you may have to pay a penalty charge.

If you are unable to pay the full sum immediately you can ask to pay in instalments.

If the estate can’t afford to pay all the tax at once, you could ask to pay in instalments.

There’s more useful information about what to do when someone dies available here, from Citizens Advice.