Capital Gains Tax question

meat_n2_reg

Hello

Me and my sisters are executors of my late mother
Probate has recently been granted and property is now up for sale

Probate value of property £100k however have been offered £115k

Individual CGT allowance is currently £11700 along with legal fees of £800 giving total of £12500

Therfore will be due to pay CGT on £2500
Is there any way that both executors CGT allowance can be combined ( me and my sisters)
Think the issue was that property was valued too low from estate agent originally should have been £110K + for property

thanks

silvercar

The CGT allowance is for the individual. So if you each inherited half the house then you each have a gain of half the 15k, less legal fees of £800= £14,200. So £7,100 each - well within your CGT allowance.

Uxb1

As I understood it only by transferring the house first to yourselves in equal parts and then jointly selling it as equally owners rather than the 'estate' as an entity selling it - this is assuming of course that you two are the beneficiaries under the will of the property.

Maybe others might know whether there is some way of retrospectively changing the value of the probate determination -especially as it was done by an estate agent rather than by a RICS qualified surveyor. Though to be fair the larger estate agents do often have a RICS qualified person on the staff who do this sort of thing.

NordicNoir

meat_n2_reg wrote: »

Hello

Me and my sisters are executors of my late mother
Probate has recently been granted and property is now up for sale

Probate value of property £100k however have been offered £115k

Individual CGT allowance is currently £11700 along with legal fees of £800 giving total of £12500

Therfore will be due to pay CGT on £2500
Is there any way that both executors CGT allowance can be combined ( me and my sisters)
Think the issue was that property was valued too low from estate agent originally should have been £110K + for property

thanks

Was your mother's estate high enough to have paid inheritance tax?

If not, the value of the house has not been 'ascertained' for HMRC purposes, and the probate value does not have to be used for the CGT calculation. You must use the 'market value' at the date of death.

If the estate has paid IHT, the probate value is considered ascertained and the probate figure is used. The decision of who is liable for the CGT depends on if the 'residue' of the estate has been ascertained. If it has, the beneficiaries can use their CGT allowances, if not, only the estate allowance is available. Also, be aware that HMRC could come back and require extra IHT if they feel that the house was under valued at probate, rather than take the difference as a capital gain.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg30700

Deciding if the estate has reached the point where it is ascertained, in the eyes of HMRC, can be quite complex. The easiest way to ensure that the beneficiaries can use their allowances, is for the executors to formally appropriate the house to the beneficiaries and the executors then sell the house, acting as bare trustees, for the beneficiaries.

This is just a document, drawn up by your solictor if you prefer, showing the appropriation. Nothing is required to be filed at the land registry, the document is just kept as proof should HMRC require evidence.

Tom99

Was inheritance tax paid? If not then the probate value will not have been 'ascertained' and you are free to adopt a different value for CGT purposes providing your changed value can be supported.
What is the date of the probate value? Prices in most parts are fairly static so saying the sale price now is the same as the value several months ago seems reasonable.
CGT is a self assessment tax so unless IHT was paid its up to you to decide if a gain was made.
From the disposal price of £115k you can deduct estate agents fees, legal fees and a scale fee allowance for obtaining probate.