CGT on sale of Inherited house

sherb1e

Morning all, my brother and I have just been granted probate on our mothers house, although no IHT is due , the London market prices have raised substantially and I think that CGT is payable, has anyone any advice as where we start with this side now?

Regards

Simon

purdyoaten

CGT will be payable on the profit made over and above the probate value. Costs of sale can be deducted. You each have an annual exemption and, if sold now, any CGT would be payable on 31st January 2017.

sherb1e

Thanks for the prompt reply, can we add clearance costs etc to expenses or is that taking the mickey? It'll be about 75K over probate value, is that split between the two of us or as a whole. Ive hardly ever dealt with tax so its all new to me.

Thanks.

Keep_pedalling

Not sure about clearance costs but based on £75k then you have each made a gain of £37,500. You each have an allowance £11,100 so you each have a cgt liability of £26,400.

You might be able to reduce that if you have sustained losses in previous years, or if you for instance are sitting a pile of bank shares bought before 2008, then now would be a good time to sell them.

Even with London prices £75k is a big leap unless for some reason it took a very long time to obtain probate. Would the increased house value have taken the estate above the IHT threshold? And if so by how much?

sherb1e

The probate took 6months and the house was unmodernised, there was a lot of interest, probate was under the IHT rate as we received double allowance for both deceased parents. So, if we're liable for about 26K each we can use estate agents and solicitors fees as expenses, to reduce this amount?

PasturesNew

you have each made a gain of £37,500. You each have an allowance £11,100 so you each have a cgt liability of £26,400.

You aren't liable for £26k, that's the amount tax has to be paid on.

You will pay tax on that amount, based on whether you're a normal taxpayer or a higher rate taxpayer.

18% is your minimum, 28% is the maximum.

So roughly £5k-£7k tax is what you'd pay.

sherb1e

Thanks for all of your replies, it is appreciated.

Sherb

purdyoaten

sherb1e wrote: »

The probate took 6months and the house was unmodernised, there was a lot of interest, probate was under the IHT rate as we received double allowance for both deceased parents. So, if we're liable for about 26K each we can use estate agents and solicitors fees as expenses, to reduce this amount?

Ha there been substantial work done to the property to increase the value? Capital additions would increase your cost for CGT and, therefore, reduce your gain.

sherb1e

No work has been done, we as executors are selling asap, the increase is in the area due to impending Crossrail sending prices up mahoosively.

getmore4less

You work out CGT on net proceeds so all selling costs are included.

It is normal to do probate valuations at the high end of the range when there is no IHT to pay.

Check carefully the allowances if selling from the estate it only gets one allowance you have to make sure you are selling in a way that HMRC will allow the allowances for all benificiaries.

Clearence is normaly cash neutral at worst unless the place was full of junk. Might be pushing it to claim any costs against CGT.