House selling with complications!

JohnAndrew

My sister and I own a house in england - an inheritance. As I live in scotland and she lives in the states we have decided to sell. I have a few questions if I may enquire here. We are joint owners with a 50 50 share.

Once sold where do we put the money? Can we have a joint account to hold the money until my sister decides what she wants to do with her share. I would take my share to invest elsewhere. She has an old uk drivers licence with the address the same as the house we would be selling and a british passport with her usa address.

Would we be liable for any taxes -- I think we would be below uk inheritance tax but I've read somewhere that my sister might have to pay some sort of tax if she takes the money out of the uk.

Any advice would be gratefully received especially if there are any other pitfalls!
I think the property would be worth 160,000 in the current climate.

AdrianC

JohnAndrew wrote: »

Once sold where do we put the money?

Wherever you want.

Can we have a joint account to hold the money until my sister decides what she wants to do with her share.

That's the last thing you want to do. As soon as you start to tie your banking with that of a US resident, the US taxman will start to take an interest in you.

Does she have any UK account still? Alternatively, the money could be "lent" to you, to then pay on to her when she's decided. But unless she thinks she wants to keep a financial foot in this country (in which case, she'd presumably have kept a UK account), then it's best to just move it now. The US taxman has very long claws, and a lot of non-US banks try very hard to avoid US-linked customers for that reason.

She has an old uk drivers licence with the address the same as the house we would be selling

She will need to send that back to DVLA. She can either transfer it to another UK address (yours?) or just say "Thanks, but I've emigrated, don't need it."

Would we be liable for any taxes -- I think we would be below uk inheritance tax

You aren't dead, yet, so you don't pay IHT at all.
The deceased's estate may have needed to pay it, but if it's got this far, that's all dealt with by their executors.

but I've read somewhere that my sister might have to pay some sort of tax if she takes the money out of the uk.

You may both have to pay Capital Gains, on your share of any increase in value between the date of death and the date of sale.
She may have to pay US tax on it. That's not a question for here.

TBagpuss

How recently did the previous owner die? If the death is recent., normally the executors would deal with the house sale and the money would go into any executors account they have opened, and then be sent to each of you separately once any costs or IHT has been paid.

If you and she are the executors, then it is best to open a separate executors account to deal with any money due to, or from the estate.

If it was longer ago, and the house was transferred into your and your sister's names, then presumably any IHT will have been paid already, as part of the Probate of the estate. If that is the case, you may have a liability for Capital Gains Tax if the house value has gone up since you inherited it. You would be responsible for completing the appropriate forms and paying the tax on your interest. I am not sure whether your sister would have liability here or if she would have to declare it on her US tax return, but either way, it would be her responsibility to deal with her liability, and yours to deal with yours.

Don't put the money into a joint account. Your share should go to you, hers to her. She would need to decide where she wants her share - e.g. if she still has a UK bank account, she can have it paid into that, if not, she can have it paid to her US account, she will have to provide the solicitors dealing with the sale proof of ID and this is likely to include her having to get copies notarised by a US lawyer, unless she can come to the UK and bring proofs with her.

JohnAndrew

Thanks for the replies so far!

The house was passed to us over 5 years ago and no inheritance tax was due - I guess the tax will be capital gains - if the house sells at the top estimate there will be a profit of around 30k. It was valued for probate at just under 130k 5 years ago.

My sister is coming to the uk in march/april time so we can sort out through a solicitor - would they see to the money transfer?

Would she be able to open her own bank account here? She has spoken about buying a property in the uk.

chanz4

Has it been rented out?

AdrianC

JohnAndrew wrote: »

My sister is coming to the uk in march/april time so we can sort out through a solicitor - would they see to the money transfer?

You haven't even started marketing it yet?
Do you have tenants in place? Have you given them notice yet? Will s21 notice be valid?
(If so, how has her share of the rent been paid, and how has she been paying for her share of maintenance etc costs?)

ThePants999

The absolute basic thing, which I'm astonished nobody's said yet, is that property transactions in the UK are handled through solicitors, and the money from the buyer will go to your solicitor, not you. You'll then tell the solicitor what to do with it, so you can tell them to send half to you and half to your sister.

PhilE

Your IHT free, and can put the money wherever you want.

Id put it in dollars, as the UK is currently prone to an economic crisis.

PhilE

There will be no capital gains tax, if the house has been the main residence of the occupant, with whom you are inheriting the property from.

If there has been a rental period, capital gains will be charged for that period only. Double check this on the UK gov website.
Any income tax on rent, is payable by the end of the tax year.

You've no other taxes to worry about, regarding this.

G_M

ThePants999 wrote: »

The absolute basic thing, which I'm astonished nobody's said yet, is that property transactions in the UK are handled through solicitors, and the money from the buyer will go to your solicitor, not you. You'll then tell the solicitor what to do with it, so you can tell them to send half to you and half to your sister.

Not necessarily. If there is no mortgage, there is no legal reason the OP cannot do the conveyancing himself if he feels competent. The money would then go direct to him.

Capital Gains Tax will be due on the increase in value between probate value and sale value, unless one or both of the owners used the property as their main residence.

You say the gain is £30K. You can deduct estate agent fees and legal fees (assuming you use an estate agent and a lawyer!), so let's say that leaves a gain of £27K. That's £13,500 each.

You each have a CGT allowance of £11,700 (this tax year, after April it may change), so £1,800 is taxable at either 18% or 28% depending on your respective income tax brackets. More here:

https://www.gov.uk/capital-gains-tax

PhilE

I can't delete my above post on CGT, disregard. Have a look through this, see what it says about inherited property...

https://www.gov.uk/tax-sell-home