Inheritance affecting first time buyer 20 July at 4:18PM in Deaths, Funerals & Probate 7 replies 293 views

sunshinebuddy

My father died recently and I will be applying for probate.  My sister and I are named executors on his will and the beneficiaries are my sister, myself and his 4 grandchildren.  He has left a house and some savings. My question relates to how inheriting a share of the house will affect one of his grand children who has not yet bought a house. Does it mean that this grandchild is no longer a first time buyer, in which case he will pay more stamp duty on a future purchase of a house and also not be able to get benefits from a LISA? If, after getting probate, we sell the house as executors before he inherits his share I believe we could pay more capital gains tax? What is the best thing to do? Have I understood the options properly? I am reading as much as I can about probate but still have a long way to go!

Mojisola

If the house is sold by the executors and the cash divided between the beneficiaries, then none of them ever owned of the house and the grandchild keeps his first time buyer status. If the others want to take ownership of the house, is there enough in savings to give him his inheritance and then the others have a larger percentage of the house?

JGB1955

Presumably it will also affect all the others too - as they now become second home owners...... and only 4 names allowed on the deeds?

Vasquez65

The house can be sold by the  Estate ( the executors having permission to do so via probate)  just don’t transfer the property to the beneficiaries.  They can then get the proceeds after the house is sold.
Is the house registered with the Land registry? 

If not it can add another layer of complication as I believe some mortgage lenders require it before granting a mortgage. 

My late Father’s house is unfortunately not registered but someone has shown an interest in buying it as a cash sale, which will save some time and hassle I imagine. 

xylophone

Presumably the house will be sold as soon as possible after probate and you will sell as executors from the estate.

If, after getting probate, we sell the house as executors before he inherits his share I believe we could pay more capital gains tax? 

Would you anticipate a substantial positive difference between the probate value and sale value?

https://www.thegazette.co.uk/all-notices/content/100719

Estate CGT Allowance is £12,300 for 20/21.

Keep_pedalling

Why do you think capital gains tax will be an issue? Unless you get the value for probate wrong it is unlikely.

sunshinebuddy

Thanks for all the responses.  It does seem that it would be much simpler to sell the property as executors.  I read somewhere that an estate has no CGT allowance but after the response from Xylophone and further reading, I have obviously got this wrong.  There does seem to be some variation in what the estate agents are giving us as 'probate' values and what they expect us to get for the property, but with a CGT allowance of £12,300 it shouldn't be too much.  I have 2 probate values and am waiting for the 3rd. Am I correct in thinking that we can also deduct estate agents fees from the sale price for the purposes of CGT?

sunshinebuddy

Just read the link you gave me, Xylophone, which answered that question! Thank you!