Probate Granted - Assent needed?

roundturn

LadyEvoDriver wrote: »

So, that means that despite the fact we've inherited the house and paid IHT on the assets, we can now pretty much claim £11,300 each before we paid CGT??? Have I read that correctly? Sorry, finding this all very confusing.

You'll need to check my maths!

£50K capital gain, less allowable fees, so say £45K capital gain. Less allowanc of 11,300 = £33,700. The Estate pays CGT at 28% so £9,436 tax bill.

£45K gain /3 = £15K each. Less 11,300 allowance each so each pays CGT on £3,700. Two pay @ 28% so bill is 1,036 each. One pays @ 18% so bill is 666.

1,036 x 2 + 666 is total tax bill of £2,738.

(plus legal fee for the Assent = £2-300?)

roundturn

Tom99 wrote: »

[FONT=Verdana, sans-serif]You may have obtained probate but its very likely that the inheritance tax office wrote to you and said they will now look at the figures you have provided.

[/FONT] [FONT=Verdana, sans-serif]They may refer your valuation to the Valuation Office which may take months and if you have sold the property only a few months after the probate valuation date the VO will be of the opinion that in today's flat market the sale value should be taken as the probate value.

[/FONT] [FONT=Verdana, sans-serif]You have to wait for a clearance letter or certificate from the IHT Office to know for sure the probate value and thus whether any CGT is payable.

[/FONT]

Probate Office would not grant Probate till HMRC have issued the clearance letter.

If Probate is granted, it is fine to sell. Chances are HMRC have either already received approval from District Valuer, or not referred it to him.

However, the Executors could distribute the majority of the sale proceeds following sale, but keep back a small amount, in case a further tax bill arose.

Tom99

roundturn wrote: »

Probate Office would not grant Probate till HMRC have issued the clearance letter.

If Probate is granted, it is fine to sell. Chances are HMRC have either already received approval from District Valuer, or not referred it to him.

However, the Executors could distribute the majority of the sale proceeds following sale, but keep back a small amount, in case a further tax bill arose.

[FONT=Verdana, sans-serif]I am sorry but you are wrong. The IHT Office allow probate to be granted quite quickly but usually reserve the right to look into the values returned.[/FONT]

Thrugelmir

Tom99 wrote: »

[/SIZE][/FONT] [FONT=Verdana, sans-serif]They may refer your valuation to the Valuation Office which may take months and if you have sold the property only a few months after the probate valuation date the VO will be of the opinion that in today's flat market the sale value should be taken as the probate value.

That's why a proper valuation undertaken by the red book rules are important. As potential redevelopment is not valued for example. Simply the property as it stands in it's current condition. With much interest prices can be bid up.

LadyEvoDriver

roundturn wrote: »

Probate Office would not grant Probate till HMRC have issued the clearance letter.

If Probate is granted, it is fine to sell. Chances are HMRC have either already received approval from District Valuer, or not referred it to him.

However, the Executors could distribute the majority of the sale proceeds following sale, but keep back a small amount, in case a further tax bill arose.

HMRC have agreed figures. As I said, 3 valuations by 3 local estate agents were carried out and we took the mid-ground because, quite honestly, we had no idea what it was worth. It was lived in by 80+ year olds so it needs 'modernisation'. Fortunately for us, the property went quickly at the highest valuation (we put it on for more than that to take a knock-down on price and didn't expect to get what we did). Compared to 'modernised' houses in the street, it went for around £300k less than they have sold for so I guess HMRC looked at that as well.

You're right though, we were advised by the solicitors to pay CGT at the 28%, less the cost of estate agents, solicitors fees, etc (they are providing a breakdown) but we're going to hold the remaining 12% in an account 'just in case'.

We did say to the solicitors, should we pay the 40% as we were fortunate to get a quick sale and they said not. They aren't a 'one man band' firm so I'm assuming they know what they are doing when they advised us to just paid CGT.

LadyEvoDriver

Thrugelmir wrote: »

That's why a proper valuation undertaken by the red book rules are important. As potential redevelopment is not valued for example. Simply the property as it stands in it's current condition. With much interest prices can be bid up.

Pardon my ignorance here, but what are 'red book rules'?

LadyEvoDriver

Tom99 wrote: »

[FONT=Verdana, sans-serif]I am sorry but you are wrong. The IHT Office allow probate to be granted quite quickly but usually reserve the right to look into the values returned.[/FONT]

Would they not have checked this before granting probate? Our solicitor clearly stated we were marketing it for £100k more than the mid-figure as you have to put the price onto the form you send in (IHT400 I believe). I guess we were very lucky we've found a buyer so quickly! Some of the properties in the road have been on for 4-5 months, but, then again, they are significantly more expensive than ours. We tried to be realistic.

Thrugelmir

LadyEvoDriver wrote: »

Pardon my ignorance here, but what are 'red book rules'?

Valuation for probate purposes. Surveyor writes up a complete detailed report on the property. Also documents the basis of the valuation. Citing comparables of actual property sold in the locality.

Here's the extent of an example report.

CONTENTS
1. IDENTIFICATION AND STATUS OF THE VALUER
2. FULL NAME AND ADDRESS OF THE CLIENT
3. PURPOSE OF THE VALUATION
4. DETAILS OF THE SUBJECT PROPERTY BEING VALUED
5. BASIS OF VALUE
6. VALUATION DATE
7. SPECIAL ASSUMPTIONS
8. ASSUMPTIONS AND EXTENT OF INVESTIGATIONS
9. SOURCE OF INFORMATION
10. RESTRICTIONS ON PUBLICATION
11. LIABILITY
12. RICS VALUATION STANDARDS
13. VALUATIONS
14. COMPLAINTS
15. RICS MONITORING

Tom99

LadyEvoDriver wrote: »

Would they not have checked this before granting probate? Our solicitor clearly stated we were marketing it for £100k more than the mid-figure as you have to put the price onto the form you send in (IHT400 I believe). I guess we were very lucky we've found a buyer so quickly! Some of the properties in the road have been on for 4-5 months, but, then again, they are significantly more expensive than ours. We tried to be realistic.

[FONT=Verdana, sans-serif]That depends entirely on what letters you have had from the IHT Office. My experience it the 1st letter, a few weeks after the IHT returns are sent, is one saying they will allow probate to be granted but are making further enquiries about the values and will contact you.

[/FONT] [FONT=Verdana, sans-serif]Probate arrived promptly but it took many phone calls and 10 months before a clearance letter arrived from the IHT Office saying “we will not be making any further enquiries”. Have you had such a letter from them? It usually adds “You have paid all the IHT due except for any due by instalments”.

[/FONT] [FONT=Verdana, sans-serif]What exactly do the letters you have received from the IHT Office say?

[/FONT] [FONT=Verdana, sans-serif]Regarding the CGT computation, if the property is to be sold by the estate, make sure your solicitors include the allowance you are permitted for establishing title ( ie obtaining probate ), this can be quite a lot, several thousand pounds, if the house value is high which it sounds like it is. Don't forget the EPC if you paid for one.

[/FONT] [FONT=Verdana, sans-serif]https://www.gov.uk/government/publications/statement-of-practice-2-2004--2/statement-of-practice-2-2004--4[/FONT]

[FONT=Verdana, sans-serif]Have you given up the idea of assenting the property to the beneficiaries? If you are still considering this, can the full IHT bill be paid from other assets within the estate or are you waiting for the house sale funds to pay the balance of IHT. If that is the case I am not sure you can then assent 100% of the house to the beneficiaries as that will not leave enough money in the estate to pay the IHT, you would need expert advice on that.[/FONT]

LadyEvoDriver

Tom99 wrote: »

Probate arrived promptly but it took many phone calls and 10 months before a clearance letter arrived from the IHT Office saying “we will not be making any further enquiries”. Have you had such a letter from them? It usually adds “You have paid all the IHT due except for any due by instalments”.

[/SIZE][/FONT] [FONT=Verdana, sans-serif]What exactly do the letters you have received from the IHT Office say?

We've not received the letter yet, just been informed by HMRC that payment has been received and they were issuing the IHT421 to the Probate Registry to grant probate. Guess I've jumped the gun here assuming the letter would just state that probate is granted. Will let you know once I have it.

Still not sure about the assent so will wait for all the figures from our solicitor first. Just don't want any more forms/payments or delays to sale process.