Inheriting a House in the UK: Tax, Probate and Your Options Explained (2026)
Updated 15 May 2026 · 9 min read · England & Wales
Inheriting a house involves several legal and tax steps that can feel overwhelming when you are already dealing with bereavement. This guide covers what happens from the moment someone dies to the point where the property is in your name — including inheritance tax, probate, capital gains tax on any future sale, what happens to the mortgage, and your options for the property.
Quick overview: what happens when you inherit a house
| Step | What happens | Who acts |
|---|---|---|
| 1. Death | Property is frozen; mortgage must still be serviced | Executor |
| 2. Valuation | Property valued at date-of-death market value for IHT | Executor + estate agent / RICS surveyor |
| 3. IHT & probate | IHT paid; grant of probate obtained | Executor + HMRC + Probate Registry |
| 4. Assent | Executor transfers title to beneficiary (AS1 form) | Executor + Land Registry |
| 5. You decide | Keep, sell, or rent — each has different tax implications | Beneficiary |
Inheritance tax — charged to the estate, not to you
As a beneficiary, you do not pay IHT personally. IHT is a charge on the estate before any assets are distributed. The estate pays 40% on the net taxable value above the available nil rate band (typically £325,000, or up to £1 million with combined transferable NRB and RNRB for a surviving spouse leaving a family home to children).
Property inherited by a surviving spouse is completely exempt from IHT under the spouse exemption. Property left directly to children or grandchildren can use the residence nil rate band (up to £175,000 per person in 2026/27) if the estate qualifies. See: inheritance tax on property UK.
CGT — the “free uplift” at death
When you inherit a house, your CGT base cost is set at the probate value (market value at the date of death). This wipes out any gain that accrued during the deceased’s lifetime — you start fresh from that value. CGT only arises if you later sell for more than the probate value. Rates: 18% (basic rate) or 24% (higher rate) for residential property in 2026/27, after the £3,000 annual exempt amount.
If you move in and live there as your main home, Private Residence Relief shelters the gain for every month you occupy it, plus an automatic 9-month final period. See: capital gains tax on inherited property UK.
What happens to the mortgage?
An outstanding mortgage is a debt of the estate — deducted from the gross estate value before IHT is calculated. The lender must be notified immediately. Most lenders will maintain the mortgage during probate without action. Once you inherit:
- You must apply in your own right to take over the mortgage — it cannot simply be inherited
- The lender runs a standard affordability check before agreeing to transfer
- If the estate has enough cash to clear the mortgage before transfer, you receive the house mortgage-free
No stamp duty on inheritance — but watch out for joint ownership
No SDLT is due when you inherit a house by assent from an estate. SDLT only applies to purchases. However, if two siblings inherit jointly as tenants in common and one buys the other’s share, the buyer pays SDLT on the amount paid. See: joint tenants vs tenants in common UK.
Your three options
- Keep and move in: PRR applies while you live there — CGT-free for that period. If you already own a home you will own two properties; no additional SDLT on the inheritance itself.
- Keep and rent out: rental income taxed at your marginal rate. CGT accrues on any post-probate-value growth. Letting reliefs are now very limited.
- Sell: if sold close to probate value, little or no CGT. CGT applies on any gain above probate value. Estate agent and legal fees are deductible.
Frequently asked questions
Do you pay inheritance tax when you inherit a house?
As the beneficiary, you do not personally pay inheritance tax (IHT) on a house you inherit — IHT is charged against the estate, not against you. The executor is responsible for calculating and paying any IHT to HMRC from estate funds before the grant of probate is issued. However, you receive the house only after probate is granted and the estate's IHT is settled — so if the estate has a large IHT liability, this can delay your receiving the property. The estate pays IHT at 40% on the net taxable estate above the nil rate band (£325,000 in 2026/27). Additional allowances may apply: the residence nil rate band (up to £175,000 per person in 2026/27) applies if the property passes to a direct descendant. If the property passes to a surviving spouse or civil partner, the inter-spouse exemption means no IHT is due at all on that transfer.
Do you pay capital gains tax when you inherit a house?
No CGT is due when you first inherit the property — inheriting is not a disposal for CGT purposes. You 'inherit' the property at its market value on the date of death (the probate value), which becomes your CGT base cost — a full 'free uplift'. This means all gains that accrued during the deceased's ownership are wiped out; you only pay CGT on gains you make after the date of death. If you later sell the house for more than the probate value, CGT applies to the difference. CGT rates on residential property in 2026/27: 18% (basic-rate taxpayer) or 24% (higher-rate taxpayer), after the annual exempt amount (£3,000). The 60-day reporting and payment rule applies: you must report and pay any CGT to HMRC within 60 days of completion of the sale. If you move into the inherited property as your main home, Private Residence Relief (PRR) shelters the gain for the period you live there, plus an automatic 9-month final period.
What happens to the mortgage on an inherited house?
The mortgage does not disappear when the owner dies. The outstanding mortgage balance is a debt of the estate: it is deducted from the estate's value before IHT is calculated, and must be cleared (or taken over) before the property can be transferred to a beneficiary. Options: (1) The estate pays off the mortgage from liquid assets (savings, sale of other assets) or life insurance proceeds, and transfers the property to you mortgage-free. (2) The mortgage lender is notified of the death; most lenders will allow the estate to maintain mortgage payments during the administration period while probate is obtained. (3) If you want to keep the property and it has a mortgage, you must apply to the lender in your own right to take over the mortgage — the lender will carry out a standard affordability check. You cannot simply inherit the mortgage; the lender must formally agree to transfer it to you. (4) If the estate cannot service the mortgage and probate takes time, the lender cannot repossess during a reasonable administration period, but will eventually move if payments stop — keep the lender informed.
Do you pay stamp duty land tax (SDLT) when you inherit a house?
No — there is no Stamp Duty Land Tax when you inherit a house through a will or intestacy. SDLT applies only to purchases (consideration-based transactions); an inheritance by assent from an estate is not a purchase. However, SDLT can arise in related transactions: (1) If two siblings inherit a property jointly and one buys the other's share, SDLT applies to the amount paid for that share. (2) If you already own your own home and inherit an additional property, the additional 3% SDLT surcharge does not apply to the inherited property itself — but if you subsequently purchase another property while owning the inherited one, the surcharge applies. (3) If a property is left via a deed of variation or family arrangement for consideration, SDLT may apply to that arrangement.
What is the process for transferring an inherited house?
The transfer of an inherited house follows a specific legal process: (1) Obtain the grant of probate (or letters of administration on intestacy) from the Probate Registry — the executor cannot legally transfer the property without this. (2) Resolve any IHT liability with HMRC — for estates with IHT due, this must be paid before probate is granted. (3) The executor transfers the property to the beneficiary by completing an assent using Land Registry Form AS1 (for registered land). The executor executes the AS1 as a deed, submits it to HMRC Land Registry with Form AP1, the grant of probate, and the registration fee. (4) The Land Registry updates the title register and issues a new title to the beneficiary. Until the assent is completed and registered, the beneficiary has only an equitable interest — they cannot sell or mortgage the property. The executor has a legal duty to complete the administration of the estate within the 'executor's year' (12 months from the date of death).
Can you inherit a house jointly with someone else — and what are the implications?
Yes — a will can leave a property to two or more people jointly. There are two ways to hold property jointly in England and Wales, and the choice has significant implications: Joint tenants: both owners hold the whole property together; if one owner dies, their share automatically passes to the surviving owner by survivorship (regardless of any will). Tenants in common: each owner holds a specified percentage share; on death, that share passes according to the will or intestacy rules — not automatically to the survivor. Two siblings inheriting a property will usually hold it as tenants in common in equal shares. Key practical considerations: both owners must agree before the property can be sold; one owner cannot force a sale without the other's agreement (though they can apply to court under s14 TOLATA 1996 for a sale order). If one owner wants to buy out the other, SDLT applies to the consideration paid. If one owner wants to live there and the other does not, a formal agreement or court order may be needed to settle occupation and costs. Careful estate planning — using tenants in common and wills — is essential for blended families and second marriages.
What are the options when you inherit a house?
When you inherit a house you have three broad options: (1) Keep and move in: if you occupy it as your main residence you get PRR (CGT-free period while you live there). You take on the costs — maintenance, council tax, insurance. If you already own a home, you will own two properties simultaneously (relevant for future SDLT on purchases). (2) Keep and rent out: the rental income is taxable at your marginal rate as property income. You get letting agent fees and allowable expenses as deductions. CGT will accrue on any increase in value from the probate value. Letting reliefs were significantly curtailed from April 2020 — PRR lettings exemption now covers only the final 9 months automatically. (3) Sell: no CGT if sold at or near probate value; CGT on any gain if value has risen since the date of death. Estate agents' fees and solicitors' costs are deductible disposal costs. You can sell during the estate administration period — the executor can sell before an assent, and the proceeds become part of the estate for distribution.
Make it easier for the people who inherit from you
A well-drafted will — with clear property gifts and up-to-date executor instructions — saves your family months of uncertainty. WillSafe’s will kit guides you through every step.
Get the Will Kit →Related guides
- Inheritance tax on property UK
- Capital gains tax on inherited property UK
- Valuing an estate for probate UK
- Selling a house during probate UK
- Joint tenants vs tenants in common UK
- What is an assent in probate?