Dealing with Property Rentals
With regard to rent and inheritance tax, there are two scenario’s that you might have to deal with: either the deceased may have rented a property, or the deceased may have rented out a property. We will now deal with these scenarios separately.
The Deceased Has Rented a Property to Line In
If the deceased has rented a property privately the person named in their will as acting on their behalf (or if there is not a will the person who has been chosen to act on their behalf) must give notice to end the tenancy. Usually the contract will stipulate a notice period of between one and two months. In many cases the Landlord will be willing to let you off paying rent if they understand your situation, though they are in no way obligated to do so. Many contracts can be easily broken if you can find someone to move in to the house asap.
If the property is rented from the council can be automatically transferred to a live in spouse, civic partner of family member providing that they have lived in that house for 12 months or more. The property can possibly be transferred to a relative or spouse who has lived there for less long, or to a non-relative, depending on the relevant councils policy. Tenants in the house who no longer wish to live there may be able to transfer to another council house if they put their case to the council.
The Deceased Has Rented out a Property to Someone Else
If you find that you have inherited a property that the deceased has rented out and it has a tenant living in it you will be immediately responsible as the landlord of that property. The first thing to do may be to contact the tenant, remembering that they too may feel shock and grief at the death of their landlord, who may have become close to them on some level. If you wish for the tenant to move on it is best to adhere to the terms of the tenancy agreement, which will normally entail them staying on until the end of their standard 12 month shorthold tenancy agreement. It may be a good idea to establish right away if the tenant has all of their rent paid up, which may require looking at the personal finances of the deceased and, if possible, talking to any lawyer they may have used. Be aware that your grief is no protection against acting promptly in honouring all of your obligations as a landlord.
Remember that you may need to sell the house in order to free up funds to pay the Inheritance Tax. Also remember that as part of your inheritance the house is liable to be taxed as part of the estate whther there is a tenant in it or not, although this can be covered with funds from other areas of the deceased estate.