CTG and using funds ti increase the value of an asset during probate

nad1611

Just wanted to clarify something. In inheritance a house is valued at £140,000, the 2 beneficiaries who are also the executors want to use their money to improve the value of the house before selling. Their output of £6500 could bring them an increase on the sale price to £160,000.

What or how would these figures be calculated for Tax purposes. Does the outlay get taken away before Tax is applied to the gain of £20,000.

nad1611

Any thoughts??:)

SeniorSam

Hi Nad1611,

The £140,000 value of the estate is just that. No more or less and the value is passed on to the two beneficiaries. With the proposal that the property is improved and then sold, the added value for improvements will be taken off the sale price, but the overall gain will be split between the two beneficiaries. They will have their own GCT allowances so it may be that no CGT will be payable if the gain is within the limits.

If you are doing this before distribution the the beneficiaries, speak with the Probate office who will clarify matters for you

Sam

nad1611

Thank you. That seems sensible.As you say I'll clarify further.

John_Pierpoint

Cover your backs with a "memorandum of appropriation"; you need to make it clear that the improvements and sale of the property is the idea of the beneficiaries, its new joint owners, not the executors desperate to pay some probate debts, while not being a venture in trade by a partnership of property developers - you don't do this regularly for a living?
[In the case of my sister and I, selling our deceased mother's house, we transferred the house into our own names as it was the end of an interest in possession ("life interest") situation and we did not want extra questions about the legal ownership from buyers, about a house still owned by our father's executors;). Then we sold it (to a property developer). I got some queries from the tax people when submitting my tax return, my sister's identical return sailed through no questions asked.]
Similar discussion here:
https://forums.moneysavingexpert.com/discussion/comment/46765699#Comment_46765699

John.

Just for the record, since a couple of years ago, the Land Registry expects land held by trustees to have its owner ship (re)registered when a trustee dies - ie you fill in a form and pay a fee if you have an old executor who dies or needs replacing through age/ infirmity.