Help with Property now above probate value

moviestar_2

Hi all,

Would welcome some advice please on what should be done next?

 

Following the recent passing of my Dad, I'm looking to sort out the estate but am having trouble figuring out what thresholds apply etc. 

Some background first.  Mum and Dad were married, owned the family home and had one child (me).  Mum passed away Dec2012.  When Dad died in April 2020 we completed the probate form and probate was granted in May 2020. 

Dad did leave a will with me as sole beneficiary

Dad’s estate comprises of the house and cash/assets, with an approx total Gross value estate of £300.7k and a net value of £298.7K as approved by probate.

We originally were going to sell our own house and move to my Dads house but due to personal circumstances we have had to cancel that. But in the meantime, had my Dads house changed to joint (mine and wife) names via Land registry.

My wife and I have now decided to sell my Dads house which was included in probate as being worth £270k (this being based on discussions with estate agents at the time and review of similar properties in the area). We have now but it up as for sale with a local estate agent and due to the pandemic and a serious shortage of this type of property in the area 3 parties have looked at out biding each other with the final price agreed as £330k.

So as I am now above the IHT £325k threshold (Are there further allowances?) should I resubmit to the Probate office and if so how?

Can I now also include the Estate agents and solicitors’ fees etc as a debt? To bring the nett value down and what else can be reasonably included in expenses etc?

Any advice would be greatly appreciated. Thanks.

thegreenone

Someone far more knowledgeable than me will come along but to start with:

Transferring unused residence nil rate band for Inheritance Tax - GOV.UK (www.gov.uk)

MovingForwards

You obtained probate, were the sole beneficiary and transferred the property into your and wife's name?

It's outside of probate and you / your wife are the legal owners because of the transfer into your names.

Had it still been in your dad's name you, as executor I assume you were, would have sold it under the estate, instead you're selling it as the legal owners and without having moved into it need to look up CGT implications. 

Shelldean

I agree with Movingforwards.

The house has been transferred to you as sole beneficiary. There for is no longer relevant to you dad's estate.

Had you sold it while still in dad's name, then that may have incurred fees as it would've still be part of his estate.

But will add I'm no expert, that's just my opinion!

xylophone

https://www.step.org/industry-news/executors-cannot-claim-property-sales-above-probate-value is from a few years back but seems relevant to your query.


The house was valued as at date of death.

You obtained probate.

You transferred the property into your name (and your wife's).

You are now the owners of the property.

You pay CGT on the difference between probate value and sale value.

You each have a CGT Allowance.

https://www.hl.co.uk/tools/tax-facts#capital-gains-tax

Keep_pedalling

Although the new value would have taken the value over his NRB there would still be no IHT to pay as you would have had both the transferable NRB from you mother and the residence NRB so you are way below IHT territory.

The issue now is capital gains tax.

moviestar_2

Ok Thanks for all your replys looks like i may have messed up going down this route if i end up getting hit with Capital gains tax :-(

xylophone

Ok Thanks for all your replys looks like i may have messed up going down this route if i end up getting hit with Capital gains tax :-(

No - it appears that your father's estate was not liable for IHT. 

 As I understand it, In terms of CGT, had the property remained in the estate, the exors would have had only one CGT allowance to use on sale.

As the property was transferred to you and your wife, you had two CGT allowances to use.


https://www.kingsleynapley.co.uk/insights/blogs/private-client-law-blog/executors-briefing-tax-and-the-family-home

Robert_McGeddon

If house value for probate was £270K and you sell For £330K there is an apparent capital gain of £60K. You can deduct selling costs in the calculation. You were the sole beneficiary so would be looking at roughly £(60-12)K @ 18% = £9K.

A couple of thoughts:

1 You may be able to use a Deed of Variation to split the estate between you and your wife. Both would get the annual CGT allowance so the tax charge would decrease.  Actually, this may not be necessary if you're already joint holders by virtue of a gift of 50% of the equity from you to your wife. May need some more details.

2 You may be able to revalue the probate value to £330K (see this form C4). I've not done this but presumably others on the forum have. Only works if you have transferable allowances for IHT so the revalued estate remains under the IHT threshold.

moviestar_2

Ok thanks for your help. Any idea what expenses can be claimed to help offset the CGT even further.

thanks

Keep_pedalling

moviestar_2 said:

Ok thanks for your help. Any idea what expenses can be claimed to help offset the CGT even further.

thanks

Only estate agent and conveyancing costs I am afraid. It is unlikely that you have spent money on major improvements in such a short time.