Inheritance Tax - Gifts

getmore4less

Without a report I think you will get the district valuer involved.

I think I would get a valuer from the nearest property auction place to have a look.

Also get some estimates/quotes for the work that is needed to back up your thoughts on the costs.

My fear would be that £140k could be too high allthough £25k-£35k is a lot of money must be some serious work needed.

weimo

Work needed is:

Detached garage requires demolition due to subsidence, also has asbestos roof. Ground works to be excavated and new raft foundation layed. Rebuild garage / storage area.

Render new plinth around bottom perimiter of property.

New Kitchen. New bathroom. Replace fence all round. Plastering in 50% of rooms due to botched electrical install never finished properly. New carpets. Replace sofits, facias and guttering.

General redecoration throughout.

The property would then be ready to rent out. Considerable work in my opinion.

somethingcorporate

It does sound expensive.

Get a second (and third) opinion on the costs involved from a trusted builder - you may have underestimated them, especially if you would want expect to replace the garage (rather than just getting rid).

weimo

The existing garage is a prefab, looking at around 5k for an equivalent.

John_Pierpoint

noh wrote: »

Whatever value you put down it is likely the District Valuation office will become involved.

http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM23002.htm

Take photos of all the defects as well as the general appearance and the floor plan;
then you can argue with VOA that the "low" as at date of death valuation us correct,
(saving some 40% inheritance tax ) and that the modest increase in value at time of sale is subject to CGT in the hands of the beneficiaries, when the house is sold some time later. As well as CGT being a lower rate of tax, of you handle the paperwork and timing correctly, the property can be assigned out of the estate and thus become subject to the beneficiaries personal CGT annual allowance.

Bit of a long shot here:

What was the cause of death of the deceased?

getmore4less

weimo wrote: »

Work needed is:

Detached garage requires demolition due to subsidence, also has asbestos roof. Ground works to be excavated and new raft foundation layed. Rebuild garage / storage area.

Render new plinth around bottom perimiter of property.

New Kitchen. New bathroom. Replace fence all round. Plastering in 50% of rooms due to botched electrical install never finished properly. New carpets. Replace sofits, facias and guttering.

General redecoration throughout.

The property would then be ready to rent out. Considerable work in my opinion.

If there is subsidance on the house that will impact value, probably not mortgagable or only with major hold back of funds.

if it just the garrage then that will not impact price much.

weimo

I do not plan on selling the property. I wish to renovate and rent out.

The subsidence is on the garage only. It is hazardous so needs to be dealt with. I'm aware that from a valuation point of view it doesnt mean much, but to reinstate what is there you would be looking at 5 - 8k.

I have done some research and found a similar property sold for 150k.

I'm not so sure how interested HMRC will be as I dont intend on selling the property.

I keep going back to the maths.....in top condition the house would sell for 175k I need to do 30k odds worth of work to get it to this state for renting purposes = 170k for all that work.......now thinking it may be better to sell and let someone else have all the headahces for 5k!

The value is simply dependant on someone who was prepared to do all the work themself so would prob pay 150k. A builder would not pay 150k.

getmore4less

If it's going to be a rental ditch rebuilding the garage.

I would try and sell this is a lot of work/RISK for marginal rental income

Might be worth clearing the garage to make it more attractive to a wider range of buyers.


HMRC will be interested there is IHT to collect, allthough they might not have to close a look.

If estate was well below the nill rate band they are less interested and you can overvalue to avoid CGT later.

weimo

Well I guess the bottom line is I will have to defend my figure if HMRC question it. I'm happy to do that, although not sure how reasonable they would be when questioning valuations. Does the DVO's word goes and thats that?? So in essence forcing you to sell.

I would be lucky to get 150k like I said before some people who are going to do the work their self, may be a good footing on the property ladder for them, as a business cant see it paying for the work. Other than that the maths just dont add up @ 150k.....Its all about there being someone out there who is looking for this type of property/project......could be waiting a fair time. Like some other properties around here people simply ask to much for them and never sell.

It is more the fact I read of cases where you get charged the additional amount and 100% penalty. In this case not sure how it would work if I didnt plan to sell. As I would have to sell to get the exact figure.

getmore4less

Ask yourself this question.

Would you buy this property, a do it up BTL?

and
Is becoming a landlord something you have always wanted to do?