capital gains tax

Ken68

Can anyone give me advice for the future....My brother and I are both retired, and bought this house in 1983. It is held at Joint tenants , and I have been living here solely since 1991. If my brother dies before me, would I be liable for any capital gains tax. He has mentioned that I might have to sell up after his death...Thanks in advance

thefirs

No. No CGT, as all capital gains are disregarded upon death.

But his estate becomes liable to Inheritance Tax upon his death, and if you are his beneficiary as implied by being joint tenants then effectively you will need to realise enough cash to pay it.

The IHT allowance in this tax year is £263,000. Tax at 40% will be payable on any excess.

Ken68

Thank you, Thefirs, for quick reply...at present there would be three other beneficiaries, and understand from another reading that the IHT would have to be paid before probate. Would this IHT be the responsibility of each and is a bridging loan the norm.I am a bachelor but the other beneficiaries are married and have children and I understand their children will benefit direct to avoid IHT on the parents.The estate would be approx a million.

thefirs

It's the estate - represented by the executor(s) - that's responsible for payment of IHT, rather than the beneficiaries. The net result is that unless a will says "I leave Ken £xxx000 and my risqué photo collection ...free of IHT.." then the IHT will be payable by the beneficiaries in proportion to the amount inherited.

Bridging finance is likely to be necessary before probate can be granted unless there are substantial liquid assets to settle the IHT bill.

I'm not a pro, and for an estate of this size it's worth investing in a bit of more detailed research, even some professional advice. The Which? publication "Wills and Probate" @ £11.99 is a good starting point and will help you decide if a solicitor can save you some money at this stage.

DYOR as they say in the investment fora.

Ken68

Thank you, the firs, complicated and shall get the book you recommend.An IHT problem really. There are in fact a possible six beneficiaries all shareable with children except in my case.So...assuming a million less 263,000 equals £737,000@40% £294,800 tax to pay.Therefore £705200 distributable,and again assuming equal shares £117,533 each and those with children will share to avoid IHT on parents . Does this sound right to you. How did you know about that 1985 Pirelli calender :-) Am also aware of the stipulation "ANY QUERY-NO BENEFIT",tho don't think it applies in this case.And how on earth do I counter undue influence without licking !!!!!! myself.

thefirs

You've more or less exhausted my accrued knowledge, though from the wills I've seen, the distribution will be tightly defined as being (e.g.) "...equally amongst my surviving relatives or if they've died then what would have been their share will pass to their surviving children etc". The other beneficiaries may be thinking of a deed of family arrangement to effectively forego their inheritance and let it pass on directly to their offspring, thus side-stepping any possibility of that sum being taxed again upon their own demise. The IHT payable upon the first death remains undiminished however.

A family property issue has been quite devisive to my wife and her brother. My father-in-law died in 1992 leaving a valuable house three-quarters owned by br-in-law, one quarter by her. He runs his medical practice from the house. He refuses/is unable to buy her out and pays no rent to her. She is unwilling to make legal moves to exact her share as she's still his sister. He's now divorcing and his wife may have a claim on half his assets. And this was the result of a will drawn up by a top London law firm. It really is best to get these things sorted out well in advance, as it's no good hoping everyone will do the right thing when the time comes!

Ken68

Thank you muchly...see you have your own problems..hope it gets sorted..and maybe retrospectively finance wise...have ordered the book from the library, and took out three more to read over the weekend.Cheers