A very long, despairing post

Gingernutty

meritaten wrote: »

I see. Brother 1 is the sticking point. Does he know all this? Does his wife? because if Sept 30th passes and certain legal landmarks havent been met - you ALL lose money dont you?

I hate to say this - but if brother is staying in a property which is not legally owned by him or he is not a rent-paying tenant, that makes him a squatter. Is this what you mean by legal action action against him? What a prat he is being!

We've tried telling him. His wife can't understand why they can't stay either.....!

Dad wasn't a wealthy man. He bought a run down, probate property in an unpopular area of London known for it's high immigrant ratio (we're Irish/Irish-English) and as the popularity of the area rose, the properties in the area just exploded in value.

Dad and Brother 1 have been ducking and diving, making a hand to mouth living for years. However, Brother 1 is still doing that and just surviving. The world, certainly London has moved on.

I believe he honestly thinks this is his chance of starting some property empire with rosy thoughts of a family business going on.

Gingernutty

Savvy_Sue wrote: »

I don't think you've said, who is the executor for your father's will?

All three of us are. Big sigh.

Savvy_Sue wrote: »

If it's you, and you have had enough of the solicitor not getting anywhere, you could engage another. Not to be done lightly, but worth considering.

No. He knows what he's doing, he just doesn't communicate that often to tell us what that is.....

Bogof_Babe

What's the difference in value between the flat and the house? If the house value is close to or above double the flat's value, it would be fairly simple to let Bro 1 keep the flat, and you and Bro 2 share the proceeds of the house.

meritaten

ginger - this solicitor is postponing retirement you say? was he a friend of your dads? because in my experience this matter of probate of a will should just have been handed on to another solicitor. why is this solicitor taking such an interest? that is unusual.

Go see him (the solicitor) and have a chat - I think there is more going on than than perhaps this solicitor wants to commit to paper. an informal chat over lunch may be worth your while. he may have advice for you he wouldnt want to put on the record.

time2deal

Gingernutty wrote: »

I've just flipped through more pages on the direct.gov and HMRC websites and I do believe you're right.

It's still more tax though

Yes, but it's only tax when you sell the property - ie when you have lots of cash available. You were worried about paying tax on income you weren't getting, now you will only pay tax when you get income - so you will be better off overall. I think the CGT thing is a red herring.

To be clear:

You do NOT pay CGT on income.

You do have to pay tax on the income (after all expenses) at your normal rate. If you are not receiving the cash, discuss it with HMRC and see if they will allow you to account on a 'cash' basis (when you only record income and expenses when you pay or recieve the cash). Therefore, no cash = no tax. So that reduces a worry for you.

HMRC says:
"If they leave their home to you in their wills, you inherit the property at its market value at the time of death. There is no capital gains tax payable on death, but the value will be included in the estate, and inheritance tax may be payable instead.

If you sell the property without having made it your own home, there could be CGT to pay, and this will be based on the increase in value between the date of death and the date when you sell."

This is why the probate value is important. If it's not high enough, and then you sell, you have to pay CGT on the gain. Or if you sell it as part of the estate, then you just pay Inheritance tax.

CGT also comes with large allowances. Something like £10k per year. So even the 18% (on just the gain between when probate was granted and when you sell) is then discounted by £10k. So stop worrying about a bill you will pay when you have lots of cash in hand!

Good luck with the rest of the issues, just thought I would try to help on the tax issue.

Gingernutty

meritaten wrote: »

ginger - this solicitor is postponing retirement you say? was he a friend of your dads? because in my experience this matter of probate of a will should just have been handed on to another solicitor. why is this solicitor taking such an interest? that is unusual.

Go see him (the solicitor) and have a chat - I think there is more going on than than perhaps this solicitor wants to commit to paper. an informal chat over lunch may be worth your while. he may have advice for you he wouldnt want to put on the record.

I understand that we are his last, if not, one of his last cases.

He is not a family friend, he came recommended by Dad's tax accountant who is.

I'm in Wolves, he's in Haywards Heath, I can't drive and it would require time off work - a sticking point in my team. Another reason to hate work.

I have, in emails, directly asked the solicitor why he's not satisfied with the estate agent's valuation, but have received no answer other than he is dissatisfied.

Gingernutty

time2deal wrote: »

Yes, but it's only tax when you sell the property - ie when you have lots of cash available. You were worried about paying tax on income you weren't getting, now you will only pay tax when you get income - so you will be better off overall. I think the CGT thing is a red herring.

To be clear:

You do NOT pay CGT on income.

You do have to pay tax on the income (after all expenses) at your normal rate. If you are not receiving the cash, discuss it with HMRC and see if they will allow you to account on a 'cash' basis (when you only record income and expenses when you pay or recieve the cash). Therefore, no cash = no tax. So that reduces a worry for you.

HMRC says:
"If they leave their home to you in their wills, you inherit the property at its market value at the time of death. There is no capital gains tax payable on death, but the value will be included in the estate, and inheritance tax may be payable instead.

If you sell the property without having made it your own home, there could be CGT to pay, and this will be based on the increase in value between the date of death and the date when you sell."

This is why the probate value is important. If it's not high enough, and then you sell, you have to pay CGT on the gain. Or if you sell it as part of the estate, then you just pay Inheritance tax.

CGT also comes with large allowances. Something like £10k per year. So even the 18% (on just the gain between when probate was granted and when you sell) is then discounted by £10k. So stop worrying about a bill you will pay when you have lots of cash in hand!

Good luck with the rest of the issues, just thought I would try to help on the tax issue.

That's reassuring.

However, the rent is income even if we don't see it ourselves - it's parked up in an account the solicitor has access to even though it's ours - but it's not ever going into our bank accounts - it's being saved to pay for the solicitor and the inheritance tax.

Even if we don't directly benefit from this income, we'll be spending it (on fees, taxes and interest) and so we still have to pay tax on it.

Gingernutty

Bogof_Babe wrote: »

What's the difference in value between the flat and the house? If the house value is close to or above double the flat's value, it would be fairly simple to let Bro 1 keep the flat, and you and Bro 2 share the proceeds of the house.

The difference is 'a lot' but not that much. Like I said in the first post

"Of course, no share of the inheritance is/will be equal to the value of the flat. So Brother 1 is effectively saying that he’ll be getting a bigger share of the estate than he is entitled to according to the terms of the will."

Gingernutty

I'm off to bed now, I'll catch up with this thread tomorrow evening when I'm home from work. G'night.

londonsurrey

If he wants the flat, he has the option of raising a mortgage to cover the difference between his share of the inheritance and the market price of the flat.