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CGT on sale of Inherited house

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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
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Comments

  • purdyoaten
    purdyoaten Posts: 1,159 Forumite
    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.
    There are 10 types of people in the world - those who understand binary and those who do not. :doh:
  • sherb1e
    sherb1e Posts: 48 Forumite
    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.
    All clear now of debts:beer:
    Great support from this forum
    Keep up the good work.:T
    Small victories mean a great deal!
  • Keep_pedalling
    Keep_pedalling Posts: 20,768 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    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
    sherb1e Posts: 48 Forumite
    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?
    All clear now of debts:beer:
    Great support from this forum
    Keep up the good work.:T
    Small victories mean a great deal!
  • PasturesNew
    PasturesNew Posts: 70,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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
    sherb1e Posts: 48 Forumite
    Thanks for all of your replies, it is appreciated.

    Sherb
    All clear now of debts:beer:
    Great support from this forum
    Keep up the good work.:T
    Small victories mean a great deal!
  • purdyoaten
    purdyoaten Posts: 1,159 Forumite
    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.
    There are 10 types of people in the world - those who understand binary and those who do not. :doh:
  • sherb1e
    sherb1e Posts: 48 Forumite
    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.
    All clear now of debts:beer:
    Great support from this forum
    Keep up the good work.:T
    Small victories mean a great deal!
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    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.
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