Selling inherited property for more than probate valuation

Tom8757

Hello

Apologies if this is not in the correct section but I am struggling to find answers to a couple of questions relating to selling inherited property.

I understand (at least I think I do) that if a property sells for more than the probate valuation, then there is a capital gains tax liability - but that no CGT is due if the property becomes your main residence after inheritance until it is sold.

Does anyone know the answer to these two questions though?

(1) Is extra inheritance tax due if the property sells for more than the probate valuation, or is it only capital gains tax? If so, is there a time limit on this?

(2) If the property is inherited by a pair of siblings and becomes the main residence for one of them until it is sold, does the other sibling have to pay CGT on their share of the property?

Thanks very much,

Tom

Keep_pedalling

We need more details.

Has the estate actually been distributed?
What timescales are we talking about?
What values are we talking about?

slowpoke_rodriguez

Tom8757 wrote: »

Hello

Apologies if this is not in the correct section but I am struggling to find answers to a couple of questions relating to selling inherited property.

I understand (at least I think I do) that if a property sells for more than the probate valuation, then there is a capital gains tax liability - but that no CGT is due if the property becomes your main residence after inheritance until it is sold.

Does anyone know the answer to these two questions though?

(1) Is extra inheritance tax due if the property sells for more than the probate valuation, or is it only capital gains tax? If so, is there a time limit on this?

(2) If the property is inherited by a pair of siblings and becomes the main residence for one of them until it is sold, does the other sibling have to pay CGT on their share of the property?

Thanks very much,

Tom

If it was that easy, we'd all be at it...:(

More inheritance tax may be due if the taxman assesses the value at date of death as higher than the probate value.

If the property becomes the main residence of a sibling after death then I believe CGT or IHT as applicable as appropriate. I'm no expert, or even a lawyer, but I think CGT may be waived if the property is sold 4 or 5 years after all IHT due is payed, but only by those living there.
Someone who does know their onions will surely be along soon...

Tom8757

Thanks for the replies guys.

No the estate has not been distributed, we are at the point of submitting the value of the property for probate.

I'll give you some more details on the situation. We had three valuations from estate agents which were quite varied - 550k, 600 and 650. I want to give the mean i.e. 600k, but my brother thinks the 650 valuation was way to high and that ours should be lower than 600.

It is likely we will sell the property within a year or two, so I was basically wondering if we would end up paying extra inheritance tax anyway if it sells for more than the probate value. In which case there is little point in seeking a lower valuation.

I don't think CGT is an issue as I will be living there in the meantime.

Thanks!

Tom

Yorkshireman99

Tom8757 wrote: »

Thanks for the replies guys.

No the estate has not been distributed, we are at the point of submitting the value of the property for probate.

I'll give you some more details on the situation. We had three valuations from estate agents which were quite varied - 550k, 600 and 650. I want to give the mean i.e. 600k, but my brother thinks the 650 valuation was way to high and that ours should be lower than 600.

It is likely we will sell the property within a year or two, so I was basically wondering if we would end up paying extra inheritance tax anyway if it sells for more than the probate value. In which case there is little point in seeking a lower valuation.

I don't think CGT is an issue as I will be living there in the meantime.

Thanks!

Tom

You need to get a paid for professional valuation at the date of death done by a RICS or similarly qualified valuer. Estate agent "valuations" are worthless for this purpose. HMR&C are likely to get the value checked by the District Valuer and valuer should be able to negotiate an agreed figure with them. This way there will be no question of the value being wrong. It will cost a few hundred pounds but will be well worth it.

Brighty

Think the general jist is, if a bit of time passes between probate and sale, then it is expected that a house would increase in value, if any increase is in line with house price increases, then any increase in covered by capital gains. If, however, the increase is way above what would be expected in that time, i.e, your valuation was wrong, them HMRC could come knocking for more IHT. That's why it's best to pay for a professional RICS surveyors valuation, as evidence for HMRC, rather than guess work or numpty estate agents

Brighty

Tom8757

Thanks again for replies

I was under the impression that taking the mean of three estate agent valuations would be fine.

Sounds like it might be necessary for a more formal valuation however?

FreeBear

If you are close to or above the IHT threshold, it is always advisable to get a proper RICS valuation. With one in hand, you would have a better basis for arguing with HMRC if they challenge the figure.

Yorkshireman99

Tom8757 wrote: »

Thanks again for replies

I was under the impression that taking the mean of three estate agent valuations would be fine.

Sounds like it might be necessary for a more formal valuation however?

You are not alone! HMR&C will have the value submitted checked by the District Valuer. They are professional surveyors so estate agent value have little influence on them. Don't forget the value also has to be at the date of death not now. If the estate value was well below the IHT threshold then it would not matter for IHT purposes but it could for future CGT calculations in future. A professional valuation is essential in your case.

no1catman

Do the HMRC check? I know of listed on https://www.ourproperty.co.uk - which use Land Registry prices - where the price listed was under the stamp duty threshold, despite it being bought by one the beneficiaries for in the region of £70k more!!

troubleinparadise

no1catman wrote: »

Do the HMRC check? I know of listed on https://www.ourproperty.co.uk - which use Land Registry prices - where the price listed was under the stamp duty threshold, despite it being bought by one the beneficiaries for in the region of £70k more!!

Yes they do - the estate I was dealing with was over the IHT threshold, and the property was in a street with very different types of properties with a wide valuation difference.

I had a RICs valuation done, but it was still passed to the District Valuer, who agreed with it.

HMRC are pretty much on the ball, and don't usually miss a revenue opportunity!