Do I need to amend my Probate property valuations?

silvermum

I'm hoping John & Jimmo can help me out here...??

I'm dealing with my late fathers estate. There is no IHT to pay as it is about £130K under the £650k limit (we transferred my late mothers full nil rate band). I completed the IHT205 and got the grant back in June.

There are two properties - A - his former residence , and B a holiday house.

At the time of the probate application I think we were too conservative and valued the properties at A: £210k and B: £100K
We were told 'approximate' values would be fine since we knew there was no IHT due.

However since then property A has sold for £230K.

My sister wants to have property B as part of her inheritance, so we got 3 estate agents to give us market valuations, and the mid point of these was £120K.

So various questions:
1) are going to be liable for CGT on property A, or will it just manage to be exempt using two years of CGT allowances? The death occurred in March this year, so the administration spans two tax years.Or is it totally exempt as a former primary residence?

2) Is there any problem with my sister inheriting a property with a lower probate value than its estimated real market value?

3) (A slightly unrelated question) My sister thinks the 'value' of property 'B' for the purposes of her inheritance should be discounted to £110k/£115k to reflect the fact that the estate will not have to pay legal/ estate agents fees etc to sell it. Is this acceptable?

NAR

I'll leave question 1 to others.

Regarding questions 2 and 3 you listed the property at £100k. Just because the mid estimate is now £120k doesn't mean that will be achieved. I'm sure £110k/£115k is covered by estimates you hold, so if you are content that is the value of the "sale" then let your sister receive that value in kind as part of her settlement.

Savvy_Sue

I'll start an answer to q1: if it wasn't YOUR primary residence, you're liable to CGT when you sell it.

However, the tax is calculated based on the Capital GAIN, so you take its value at the date of death, and its value at the date of sale, and that is your GAIN (or loss).

THEN you take off your annual allowance - if you sell reasonably quickly there won't be anything to pay.

This is only a very brief answer, for your situation, and may be quite wrong ...

getmore4less

net gain after costs.

did you ascent to both of you or sell within the estate.

did anyone live in the place?

only one cgt allowance in year of sale for each owner

John_Pierpoint

I will let jimmo comment on this one.

silvermum

getmore4less wrote: »

net gain after costs.

did you ascent to both of you or sell within the estate.

did anyone live in the place?

only one cgt allowance in year of sale for each owner

It was sold within the estate i.e. it wasn't specifically given to us in the will, is that what you mean? No one lived in it other than my dad.
Does that mean that the CGT allowance 'belongs' to my Dad/the estate?

I've read about probate values being able to be updated if they haven't been 'ascertained' (is that correct?) by HMRC.
We underestimated the value for probate by looking at the sales of other flats in the same block, but later discovered his was one of the bigger ones, so not comparable.

I'm not sure what I need to do?

nom_de_plume

Assuming the information in this thread is correct, you can indeed look at a revaluation.

It would probably pay to get a professional valuation based on date of death rather than estate agents values to back your case.

Were you and your sister joint executors? If so, would you be able to use your combined CGT allowances? (More thinking out loud rather than actual fact based knowledge).

nom_de_plume

Another answer in response to a similar question here.

The top answer by someone who purports to have been an accountant for 40 years.

silvermum

nom_de_plume wrote: »

Assuming the information in this thread is correct, you can indeed look at a revaluation.

It would probably pay to get a professional valuation based on date of death rather than estate agents values to back your case.

Were you and your sister joint executors? If so, would you be able to use your combined CGT allowances? (More thinking out loud rather than actual fact based knowledge).

Thanks. Yes, Sis and I were the only joint executors, although she has had power reserved.

I'm a bit confused - where does the CGT liablity 'show' or come out in the administration? If we have never been the 'owners' of it, but it has been sold within the estate, then I don't see how our own personal CGT allowances can be applied?

Also, does anyone know what I need to do next? Do I actively have to contact HMRC or wait for it to be raised (if the probate value was never actually ascertained).

nom_de_plume

More reading on CGT and Executors here

nom_de_plume

And helpsheet here