CGT on sale of deceased's house.

izaac

The value of the house was given as £435,000 (average of 3 wildly variable EAs valuations) at the time of death, early Feb 15. I thought then than the place was being undervalued but recognised I needed proof that my estimation was backed up with evidence.

We've just accepted an offer for £455,000, 2 and a half weeks after putting it on the market.

We have done about £2000 of property maintenance on the place, as an aside.

My question- who tells us what CGT is payable on the difference? Can we 'challenge' this, if /when we get hit?

And what would the damage be? I can't remember if 'the estate' alone has a CGT relief of is it £11,000; or whether all the 4 beneficiaries do (i.e. £11k each)- even though 2 beneficiaries are minors?

Thanks

G6JNS

izaac wrote: »

The value of the house was given as £435,000 (average of 3 wildly variable EAs valuations) at the time of death, early Feb 15. I thought then than the place was being undervalued but recognised I needed proof that my estimation was backed up with evidence.

We've just accepted an offer for £455,000, 2 and a half weeks after putting it on the market.

We have done about £2000 of property maintenance on the place, as an aside.

My question- who tells us what CGT is payable on the difference? Can we 'challenge' this, if /when we get hit?

And what would the damage be? I can't remember if 'the estate' alone has a CGT relief of is it £11,000; or whether all the 4 beneficiaries do (i.e. £11k each)- even though 2 beneficiaries are minors?

Thanks

You have to declare any capital gain on your annual tax return. You are responsible for asking for the form if you have not been sent one. There is an annual exemption of around £11,000 as an individual. If the executors are selling hen the exemption is less. You might need to get some professional advice on how to minimise the tax payable. You can't challenge the base value as that is what you declared for probate.

izaac

Thanks. As a matter of interest, yes, we are selling as the executors, but we're also (the 2 adults) beneficiaries. Presumably we declare as beneficiaries?

Can a minor have a CGT exemption?? I doubt it, but just asking! If this sale goes through, each adult will get £8000 'more' than they were 'expecting', and each minor £4000.

getmore4less

All individuals have a CGT allowance as they do a income tax personal allowance. kids pay tax just the same every one else

You will need to structure the sale to get all 4 allowances, the estate gets one.

https://www.gov.uk/government/publications/rates-and-allowances-capital-gains-tax/capital-gains-tax-rates-and-annual-tax-free-allowances


Even if all £20k was taxable max CGT tax is £5600. so no idea where you get £8k/£4k each

IHT would have been £8k, if there was no IHT on the estate you estimate on the high side and is relatively easy to find evidence if the sales are out there for similar properites.

Keep_pedalling

As you are selling the house as representatives then you only get an allowance of £11,100 so you have £9900 of taxable gains at 28% = £2492. You can't ofset maintenance costs against that, but you can ofset the cost of sale against the gain. You can also ofset the gain against any asset that has produced capital losses such as shares.

To get you individual allowances you would need to cancel this sale, transfer ownership to the beneficiaries then start again which is probably not worth doing for amount involved. As executors it is your responsibility to pay the CGT, so once you know what it is then you need to contact HMRC to get some guidance on how you do that.

izaac

Thanks. To explain re the £8k and 4k, what I meant is, if the house sells for 20k more than our original estimation of value, that 20k divides up into those sums as not all beneficiaries get the same share as each other.

Can I ask- who do I go to to sort out how to structure this? A financial advisor? From 'the Yellow Pages', as it were? I will need one anyway as I have to put the minors' inheritances into Trust

izaac

Oh, and there was no IHT payable as we could combine 2 people's allowances.

G6JNS

izaac wrote: »

Thanks. To explain re the £8k and 4k, what I meant is, if the house sells for 20k more than our original estimation of value, that 20k divides up into those sums as not all beneficiaries get the same share as each other.

Can I ask- who do I go to to sort out how to structure this? A financial advisor? From 'the Yellow Pages', as it were? I will need one anyway as I have to put the minors' inheritances into Trust

Phone solicitors and ask if they have STEP qualified specialist. Check the CGT position with HMR&C as executor get a lower figure than individuals.

getmore4less

(Is any beneficiary living in the place?)
The convayancing solicitor should be able to sort out how to get more than the estates allowance.

By the time you knock off EA fees and solicitors fees(for selling only) the gain is going to be quite small anyway might not be worth the cost if the solicitor handling the sale has to get paid advice because they don't know how to do it.

There are examples out there if you google for things like using beneficiaries CGT allowance.

(With no IHT and thinking the house was worth more should have done the research to show a higher value or used/weighted towards the higher EA one)

With £70k(ish) each for the minors you will need investment advice forthem

There is another angle if the probate value has not been assertained you can use a new base value for the CGT calculations(if you have the evidence to support the valuation) but HMRC might query it, give the sale is so close(6months) to the DOD that may be acceptable, 4.6% in 6 month whats the market like in the area.

G6JNS

getmore4less wrote: »

(Is any beneficiary living in the place?)
The convayancing solicitor should be able to sort out how to get more than the estates allowance.

By the time you knock off EA fees and solicitors fees(for selling only) the gain is going to be quite small anyway might not be worth the cost if the solicitor handling the sale has to get paid advice because they don't know how to do it.

There are examples out there if you google for things like using beneficiaries CGT allowance.

(With no IHT and thinking the house was worth more should have done the research to show a higher value or used/weighted towards the higher EA one)

With £70k(ish) each for the minors you will need investment advice forthem

There is another angle if the probate value has not been assertained you can use a new base value for the CGT calculations(if you have the evidence to support the valuation) but HMRC might query it, give the sale is so close(6months) to the DOD that may be acceptable, 4.6% in 6 month whats the market like in the area.

If the estate has been admitted to probate then the value of the house must have been included. A competent STEP qualified solicitor should gave the OP at least their fee.

getmore4less

G6JNS wrote: »

If the estate has been admitted to probate then the value of the house must have been included. A competent STEP qualified solicitor should gave the OP at least their fee.

Untill it is assertained value is up for negotiation with HMRC on the CGT front.