House sale after probate

buffalito

My mother passed away in May last year and as one of the executors of the will I am looking after the estate. We got probate at the end of last year and everything seems to be ok.

I just had one question regarding the sale of the houses. The main house was valued by a professional RICS valuer for probate. We've now approached a few estate agents in order to sell and they both say it is worth between 50-60k more than the RICS valuation.

When probate was being applied for we used 3 of the 4 allowances and it came under the IHT threshold so no IHT was paid.

My mother's will states
"subject to the above, my executors shall transfer the trust fund to, or so as to be under the control of the trustees, to be held upon the trusts and with and subject to the powers and provisions of my will"

Residuary gifts - substantive trusts

Subject to the provisions above, the trustees shall hold the trust fund upon trust to divide the same into four equal parts and hold such parts as follows.."

I think there's no chance of us being able to amend the probate valuation so am I right in saying I can assent the two houses to the 4 beneficiaries in order to sell based on the will or does it have to sold by the estate which will incur a bigger CGT charge i.e 28% and only one allowance?

Thanks for any help.

MovingForwards

How much was the estate valued at in total, less debts?

Normally people just notify HMRC and pay additional IHT.

It happens quite frequently when properties are not sold straight away after probate.

Don't create unnecessary work or complications by transferring the properties only to sell them!

buffalito

It was under the £775,000 threshold but we still had the transferable NRB to use which would still mean the estate would be untaxed.. Can we still use that in retrospect?

Tom99

buffalito wrote: »

My mother passed away in May last year and as one of the executors of the will I am looking after the estate. We got probate at the end of last year and everything seems to be ok.

I just had one question regarding the sale of the houses. The main house was valued by a professional RICS valuer for probate. We've now approached a few estate agents in order to sell and they both say it is worth between 50-60k more than the RICS valuation.

When probate was being applied for we used 3 of the 4 allowances and it came under the IHT threshold so no IHT was paid.

My mother's will states
"subject to the above, my executors shall transfer the trust fund to, or so as to be under the control of the trustees, to be held upon the trusts and with and subject to the powers and provisions of my will"

Residuary gifts - substantive trusts

Subject to the provisions above, the trustees shall hold the trust fund upon trust to divide the same into four equal parts and hold such parts as follows.."

I think there's no chance of us being able to amend the probate valuation so am I right in saying I can assent the two houses to the 4 beneficiaries in order to sell based on the will or does it have to sold by the estate which will incur a bigger CGT charge i.e 28% and only one allowance?

Thanks for any help.

You do not need to transfer the legal interest to the beneficiaries only the beneficial interest. You can do this via an assent of equitable interest. This transfer does not need to be registered with the Land Reg so is both cheaper and quicker. You would need to all sign the assent before you exchange contracts on the sale and since it is quick you can leave it until you have an agrees sale and will know whether the estate will be liable for any CGT.

Don't forget that as well as sale costs the estate can also set off the equivalent of acquisition costs based on the actual costs of obtaining probate or a scale fee if higher. See here, in your case it looks like 0.8% of the probate value of the property being sold.
https://www.gov.uk/government/publications/statement-of-practice-2-2004--2/statement-of-practice-2-2004--4

The other option if everything has been dealt with apart for these sales might be to claim that the administration period of the estate has ended because the residue of the estate has been ascertained prior to the sale being completed. Using that route you can claim the beneficiaries are the beneficial owners even though there has been no formal transfer.

Either way you will have 4x£12k allowance with each party also being able to deduct their share of the sale costs, EPC and costs of the assent if you go that route.

Owain_Moneysaver

buffalito wrote: »

We've now approached a few estate agents in order to sell and they both say it is worth between 50-60k more than the RICS valuation.

That does not mean it actually will sell for the higher value. Agents often inflate values to get the instruction.

lisyloo

and they both say it is worth between 50-60k

Is that definitely what they said it was worth or was it an initial asking price?
As the above post it's only worth what someone is willing to pay which you'll only know when you get offers/sale.

buffalito

Thanks for the reply. Sorry. I forgot to mention there is still rental income coming into the estate. I can't claim the administration period has ended in this case?

Tom99

buffalito wrote: »

Thanks for the reply. Sorry. I forgot to mention there is still rental income coming into the estate. I can't claim the administration period has ended in this case?

There is no black and white definition of when 'the residue of the estate has been ascertained' but there are some notes in the HMRC CGT Manual here:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg30700
HMRC are wise to the fact that the taxpayer will want to claim the option which results in them paying less tax so if you are fairly sure the estate would have a CGT bill and the cost of the assent is not too great that would be a more certain option to minimise CGT.
Then each beneficiary will report their share of the gain and pay any tax accordingly.
One area where you may encounter a problem is if any of the beneficiaries are first time buyers and hoping to avoid SDLT when they purchase a property because after the assent they will no longer be able to claim FTB stamp duty relief.