How to deal with CGT for estate

MonsterKraken

HI All,

I've been dealing with my father's estate since his death last July, and I'm 1 of 4 equal beneficiaries.

His estate was well above the £325k limit for inheritance tax (and my parents are long divorced) so the full suite of IHT forms were completed by a solicitor and probate was granted in January.

HMRC appointed a district valuer to check and challenge the property valuation while the property was in the process of being sold. We eventually agreed a valuation of £443k with the valuer at the time of death (which was passed back and accepted by HMRC), while the property then sold for considerably more, £520k in March.

All outstanding IHT has been paid on the estate, and I have confirmation of "no further enquiries" from HMRC (for IHT at least).

This leaves a capital gain of £77k, although I understand that some deductions can be taken:
a) cost of marketing the property
b) cost of conveyancing
c) cost of establishing probate (i.e. all solicitor's fees)?
d) annual CGT exemption (£11100)

Some questions then:
1) Are the deductions as outlined above correct? Are there others?
2) As the period of administration is now into a second tax year is a second annual CGT exemption now allowed even if the property was sold in the first tax year (guidance suggests the CGT "exemption will be the same as an individual during the year of death and for two years thereafter")?
3) How is CGT paid? Must a specific form or an annual tax return be completed by a professional?

Thanks.

Yorkshireman99

MonsterKraken wrote: »

HI All,

I've been dealing with my father's estate since his death last July, and I'm 1 of 4 equal beneficiaries.

His estate was well above the £325k limit for inheritance tax (and my parents are long divorced) so the full suite of IHT forms were completed by a solicitor and probate was granted in January.

HMRC appointed a district valuer to check and challenge the property valuation while the property was in the process of being sold. We eventually agreed a valuation of £443k with the valuer at the time of death (which was passed back and accepted by HMRC), while the property then sold for considerably more, £520k in March.

All outstanding IHT has been paid on the estate, and I have confirmation of "no further enquiries" from HMRC (for IHT at least).

This leaves a capital gain of £77k, although I understand that some deductions can be taken:
a) cost of marketing the property
b) cost of conveyancing
c) cost of establishing probate (i.e. all solicitor's fees)?
d) annual CGT exemption (£11100)

Some questions then:
1) Are the deductions as outlined above correct? Are there others?
2) As the period of administration is now into a second tax year is a second annual CGT exemption now allowed even if the property was sold in the first tax year (guidance suggests the CGT "exemption will be the same as an individual during the year of death and for two years thereafter")?
3) How is CGT paid? Must a specific form or an annual tax return be completed by a professional?

Thanks.

You can't deduct the fees for dealing with probate nor AFAIK, the marketing costs. I suggest you ask your solicitor to advise you of a tax specialist.

MonsterKraken

Yorkshireman99 wrote: »

You can't deduct the fees for dealing with probate nor AFAIK, the marketing costs. I suggest you ask your solicitor to advise you of a tax specialist.

Thanks for your quick reply.

I may have used the term 'marketing' incorrectly. I'm talking about the estate agents fees, which I thought were deductible (the net sale price of the property was only £509k after estate agents fees and conveyancing). Is that not the case?

The query about the cost of establishing probate came from this:

gov.uk/government/publications/statement-of-practice-2-2004--2/statement-of-practice-2-2004--4

which suggests that PRs can claim either "the actual allowable expenditure incurred" or a percentage based on the gross valuation of the estate as a deductible cost for CGT purposes.

It's certainly my intention to consult a qualified tax expert, I just wanted to go prepared and be clearer what I was asking for.

Yorkshireman99

MonsterKraken wrote: »

Thanks for your quick reply.

I may have used the term 'marketing' incorrectly. I'm talking about the estate agents fees, which I thought were deductible (the net sale price of the property was only £509k after estate agents fees and conveyancing). Is that not the case?

The query about the cost of establishing probate came from this:

gov.uk/government/publications/statement-of-practice-2-2004--2/statement-of-practice-2-2004--4

which suggests that PRs can claim either "the actual allowable expenditure incurred" or a percentage based on the gross valuation of the estate as a deductible cost for CGT purposes.

It's certainly my intention to consult a qualified tax expert, I just wanted to go prepared and be clearer what I was asking for.

AIUI the rules are not as clear cut as they should be. That is why you dpo need professional advice. The specialist will have access to all the paperwork which nobody on here does .