dad's will and leaving it to grandson(CGT)

mrs_baggins

my dad is making a will out (Hopefully he doesnt know anything untoward!) and said he was going to leave house to me -we discussed it and he is now going to leave it to his grandson which I think is best. Its not worth a huge amount (about 125k) if that and was wondering about capital gains tax. To be fair my son will probably sell it straight away as he lives in a diff part of the country then he can buy one there maybe. If my son sells it say within 3 months of him inheriting it does he pay CGT? from what I understand its the diff between when you aquire an asset and when you sell it but I may be wrong here. Anyway hopefully that time will be years away and things may change in the future but I just want to get facts together as much as I an. Thanks all

Gorgeous_George

I 99% sure that he doesn't have to pay anything in CGT.



GG

joshm_2

Again I am not 100% certain but I believe that if the house was sold following (heaven forbid) your father's death then you would be liable for CGT on the difference in the house's value between when he died and the time of sale. If these two dates were close as you suggest then it may not be too bad.

There are also inheritance tax implications to think of in this situation.

mrs_baggins

joshm wrote:

If these two dates were close as you suggest then it may not be too bad.

There are also inheritance tax implications to think of in this situation.

thanks both. yes i think its the diff between the 2 dates as well.

not sure if IHT will be part of it as his whole estate will be way under the £265,000 limit or whatever it is at the moment. So presumably there will be no IHT? its all very complicated! you just think someone has left you something and thats that!!

Mrs_pbradley936

He will not have to pay either. Any investments he makes with the money will be taxed and if he decided to keep the house and rent it he would pay tax on the income.

Most people would pay a chunk off their own mortgage to reduce their monthly outgoings which may be sensible. BUT watch out our for penalties for doing that AND be careful of having more spending money than you are used to. Some people get carried away and buy things they do not need and end up in debt.

mountainofdebt

My understanding that if the grandson sells the property for a higher price than it has been valved at for probate, then he would be liable for CGT - although this would only be payable if he exceeded his CGT allowance in the Tax Year concerned.

Inheritance tax would be paid on the total value of the grandfather's estate which would include the probate value of the house and it comes from the estate so the grandson would not be liable for this personally.

jockettuk

ring the tax office ask them for the info as each case different.

jonnyw_2

mountainofdebt wrote:

My understanding that if the grandson sells the property for a higher price than it has been valved at for probate, then he would be liable for CGT - although this would only be payable if he exceeded his CGT allowance in the Tax Year concerned.

Inheritance tax would be paid on the total value of the grandfather's estate which would include the probate value of the house and it comes from the estate so the grandson would not be liable for this personally.

When probate goes in for donor's estate you can only put an estimate in for what unsold assets like the house are worth. You dont know exactly what its worth, unlike stocks and shares.

If the asset is put on the market for sale straight away you can substitute the actual sale price acheived for the estimate. You can also Knock off the costs of sale ie agents and solicitors fees.

What you are doing is putting in an actual figure in as a substitute for an estimate.

CGT would be a possibility if you deliberately delayed the sale.

dealornodeal_3

mrs_baggins wrote:

thanks both. yes i think its the diff between the 2 dates as well.

not sure if IHT will be part of it as his whole estate will be way under the £265,000 limit or whatever it is at the moment. So presumably there will be no IHT? its all very complicated! you just think someone has left you something and thats that!!

I do believe that the taper allowance per annum between the time one inherits the property, and the time of sale comes into play!