my friend's dad died without a will and she

Deals_2

inherited a house as the daughter. she has a young childand they went to live in this house.

it was originally a bit of land with a shed type of property and i believe she managed to get permission to live there with some kind of law from agricultural usage or something along those lines.

Initially at probate the value was 40K until she also got this permission to live there which would have given a value of around 300K for the property.

she has now got the property valued at over 500K . she did not own any other property before . she thinks that she may still have to pay 40% which seems extortinate considering they did not own anything beforehand and is her now only residence.

any tips? ways around it? thanks in advance.

WhiteHorse

Start again. This is hopelessly confused.

getmore4less

I think it will depend on timings and the timeline

value at death (this determines IHT)
When the property was transfered from the estate to her
when was the change of use
value at transfer
value now

Who has done the administration?
What stage is the administration?

I don't think there will be any IHT

There might be some CGT issues if the uplift in value was during administation before the transfer.


I have not needed to look into this sort of senario, most likely need some specialist tax advice.

Itismehonest

I think the OP is talking about a place which has recently been granted a Certificate of Lawful Use.
Unfortunately, I can't help on the tax side, though.

Deals_2

sorry if confusing. not sure what you mean by administration.

could you explain what you mean exactly:
"There might be some CGT issues if the uplift in value was during administation before the transfer. "
are you sayign once transferred there would be no capital gains issue if it increases after the official transfer was done?
thanks everso!!
i have read this

If you decide to sell the property

Paying Capital Gains Tax

Capital Gains Tax (CGT) is paid when someone makes gains (profits) above a certain level when selling certain assets. However, when someone dies any increase in the value of the property up to the date of the death isn't subject to CGT.
If you sell it later, there may be CGT to pay on any gain since the date of death though this won't usually apply if you sell an inherited property that you've been living in as your main home since you inherited it.

so not sure there is any liability?

getmore4less wrote: »

I think it will depend on timings and the timeline

value at death (this determines IHT)
When the property was transfered from the estate to her
when was the change of use
value at transfer
value now

Who has done the administration?
What stage is the administration?

I don't think there will be any IHT

There might be some CGT issues if the uplift in value was during administation before the transfer.


I have not needed to look into this sort of senario, most likely need some specialist tax advice.

getmore4less

Admistration is the period that the estate is being sorted.

Date of death(DOD) untill assets are distributed.

The normal primary residense CGT reliefs apply but not sure if this applied from DOD or date of transfer.

I suspect it is DOD. so there may only be a short period from DOD till she moved in and made it the primary residence

Savvy_Sue

WhiteHorse wrote: »

Start again. This is hopelessly confused.

Agree. Deals, there are several possible issues here, and it's completely unclear which of these your friend needs help with.

Inheritance tax? Capital Gains Tax? Stamp Duty Land Transfer?

Is she wanting to sell the property, or still dealing with IHT?

John_Pierpoint

Yes we need more information and in particular dates - let us say down to the year and month

There is a whole swamp of normal law exemptions that apply in agricultural areas
https://forums.moneysavingexpert.com/discussion/3401517
https://forums.moneysavingexpert.com/discussion/1373841

There have been some notorious examples reported in the press of HMRC attempting to force executors to apply for planning permission, in order to prove that the normal house worth say 250K is really worth 999K because it has a big back garden and is on a corner plot.;)

Provided a reasonable amount of time has passed - say a year - and the "field with a shed" has passed through the "admon" (probate/administration) process as "an excepted estate", good luck to her.
http://www.hmrc.gov.uk/inheritancetax/iht-probate-forms/excepted-estates.htm
Perhaps she has turned the agricultural shed into a personal residence by living in it for 4 years, unmolested by the planning system?
But there there is still the problem of getting the agricultural worker restriction lifted, before "the shed" can be sold on the open market as a building plot.
Does she gain some sort of living from agricultural work?

It sounds to me like she has a principal private residence and no current tax worries?
Might need to worry about getting married and then divorced though;)