CTG and self assessment

bujin

My partner is about to become a beneficiary in a Will. There is a small amount of money from Banks etc and house sold which was worth for Probate about £130.000. Since then he and a sibling, (who was also an Executor) have made improvements costing about £10,000. The Estate Agent sold the house at £155,000.

Would CTG be payble on the house's increase. .

ceeforcat

Well on the bare facts it looks like the gain is £15000 less the costs associated with the sale. This, divided by two, is well under the CGT exemption and no tax would be payable. It still needs to be declared to HMRC though but in the return for 2011/12 which will not be issued until April 2012.

bujin

Thanks for that.

ceeforcat

No problem - but your partner will need to tell the taxman - they will have no knowledge of this - but wait until after April as sods law will dictate that you get a return for 2010/11 also when you do not need it.

bujin

Okay. So in April or just after, we'll need to get a Self Assessment Form, my partner normally pays through PAYE, so doesn't have to normally fill one out. I guess there's a place to put the outgoings that were made for repairs to be deducted?

Just out of interest, we are both beneficiaries for a completely different Will which also has a house to sell. Do we get an individual allowance per year or is it combined as we are a couple(married). Obviously I'm thinking the two houses could take him over his allowance for that year, does that sound right.

Mikeyorks

No combined allowances. It's £10600 each - if we're still talking CGT?

Where a house is sold as part of the estate winding up - CGT won't normally be an issue. It's only where you create additional value between death .... sale. Either by refurbishment or delaying the sale.

bujin

Well in this case that certainly happened the property was enhanced to increase it's value.
So if it's £10600 each, and they paid £10,000 for enhancements, the increase in value was £25000. Does the increase in value of a property sold within an Estate always get divided by the number of beneficiaries?
I presume this increase would be divided by two and the cost of renovations divided by two.
So the increased value is £25000/ 2=£12500 - £5000(cost of repairs each)=£7500

So his allowance of £10600- 7500=£3100. So no CGT to pay. Is that right?

Mikeyorks

bujin wrote: »

Is that right?

Post #2 has surely already answered that?

I was responding to the final para of post#5 - where you throw in a further house. And pointing out that CGT isn't usually a factor where a house is sold within the estate settlement process.

bujin

Hey there's no harm in checking!!
Both houses sold for more than their probate value.So there has been an increase in value whilst winding up an estate and since the time of death.

ceeforcat

Does the increase in value of a property sold within an Estate always get divided by the number of beneficiaries?


You are confusing the issue - the property in no longer 'within an estate, after the will has been distributed. It is now the personal possession of the beneficiaries, of which there are two.

Mikeyorks

bujin wrote: »

Hey there's no harm in checking!!

Indeed. But why do that when the original question is clearly answered. Theres no harm in reading!

And if you then want to throw in a supplementary - at least then have the nouse to seperate the replies.