Is there a probate fee when you sell a house if there was a will?

Froglet

BooJewels said:

@Froglet - I don't know as much about it as others, so hopefully someone else will chime in to clarify. 

As I understand it (and I'm happy to be corrected), Capital Gains only applies if you sell it for more than you claimed it was worth during probate - i.e. you gain during that time period.  If your sister already resides there, then I don't think it applies to her, as it's her main residence.   

You only pay CGT on the amount of uplift in value, not the whole house price and each person is only responsible for their own share.  I think from memory the current allowance is something like £12,300.  So, for example, if the house sells for £20,000 more than you valued it for probate (as in our case, we applied for probate a while ago and house prices have gone up a chunk in that time, we're going to be borderline for paying some) and you and your sister share it equally, that's only 10k each, so CGT wouldn't be payable for either of you.

In the example I posted that you quoted, you'd have to have a gain of something like £100,000 per person to have to pay anything like £8,500 in CG tax.

Thanks for your reply.At least I know now what to look for .So much to do,it's hard enough just getting through the initial steps and arranging the funeral.We have a third sister so the bungalow will have to be sold.It is a straightforward will with just that,and her meagre savings she had.Paying expensive care home fees put paid to them.Luckily we are a close family and there will be no pressure to sell.I intend to do the probate myself if I possibly can.

Thrugelmir

BooJewels said:

You only pay CGT on the amount of uplift in value, not the whole house price and each person is only responsible for their own share. 

The property until sold or transferred remains in the estate. The estate is liable to CGT if the property is subsequently sold at a value than that declared for probate purposes. The estate receives one annual allowance. 

james_uk

Sorry i didn't realise i actually have a copy of the IHT205 form, so on this it states:

£60,000 in the bank although i am not sure if this is a deffinite figure as i knew of an amount that was a little under £50,000 but the bank told me there was a 2nd account that took it over 50 and that is why a grant of probate was needed. i still do not have this yet and they wouldn't say at the tiime how much was in this second account, i got the impression it only took it a bit over 50.

Value of the freehold/leasehold residence of the person who has died if owned in their sole name or as tenants in common

£60,000 (there is a potential that the house could be sold for a little more than this) i havn't had it valued yet  but it isn't in very good condition and needs a lot of work, but i have been told other similar houses in the area have been sold for between 60 - 70,000

gross value of assets not included (above) £123,000

Expenses: £4000 for funeral

net estate of value in the uk for grant of representation £119,000

gross value for IHT purposes £123,000

net qualifying value for accepted estae 119,000

So does that mean if i sold the house for more than 60,000 i would have to pay IHT? and in that case would i be best selling for exactly £60,000 if the price was just a little over 60k to avoid paying this?

And also what if when the grant of probate comes back from the bank that is anything over £60,000? will i also owe IHT on that as well?

James

BooJewels

Thrugelmir said:

BooJewels said:

You only pay CGT on the amount of uplift in value, not the whole house price and each person is only responsible for their own share. 

The property until sold or transferred remains in the estate. The estate is liable to CGT if the property is subsequently sold at a value than that declared for probate purposes. The estate receives one annual allowance. 

Thank you for the clarification.  I hadn't realised this distinction until @p00sticks mentioned it.  Is the allowance the same for the estate, as for individuals, at £12,300?  In which case, we'll definitely have to pay some.  Blast.

JGB1955

You won't be paying any IHT until you get to £325K, so no need to worry... 

sammyjammy

james_uk said:

Sorry i didn't realise i actually have a copy of the IHT205 form, so on this it states:

£60,000 in the bank although i am not sure if this is a deffinite figure as i knew of an amount that was a little under £50,000 but the bank told me there was a 2nd account that took it over 50 and that is why a grant of probate was needed. i still do not have this yet and they wouldn't say at the tiime how much was in this second account, i got the impression it only took it a bit over 50.

Value of the freehold/leasehold residence of the person who has died if owned in their sole name or as tenants in common

£60,000 (there is a potential that the house could be sold for a little more than this) i havn't had it valued yet  but it isn't in very good condition and needs a lot of work, but i have been told other similar houses in the area have been sold for between 60 - 70,000

gross value of assets not included (above) £123,000

Expenses: £4000 for funeral

net estate of value in the uk for grant of representation £119,000

gross value for IHT purposes £123,000

net qualifying value for accepted estae 119,000

So does that mean if i sold the house for more than 60,000 i would have to pay IHT? and in that case would i be best selling for exactly £60,000 if the price was just a little over 60k to avoid paying this?

And also what if when the grant of probate comes back from the bank that is anything over £60,000? will i also owe IHT on that as well?

James

No inheritance tax as its below the threshold, no CGT payable unless you sell the house for more than £72,300.

james_uk

Thank you for everyones help!

Owain_Moneysaver

james_uk said:

£60,000 (there is a potential that the house could be sold for a little more than this)

net qualifying value for accepted estate 119,000

So does that mean if i sold the house for more than 60,000 i would have to pay IHT? 

No, only if the total value of the estate exceeds the IHT nil-rate band, which is at least £325k. You may also have a spouse's £325k transfer of nil-rate band and a residential nil-rate band for the value of the property available. 

You might have to pay some Capital Gains Tax on the value of the house exceeding £60k. The Annual Exempt Amount is £12,300 per year and the estate can claim that for the year of death and the following two tax years. 

My understanding is therefore if you sell it for up to £72,300 before 4 April 2022 (death and sale in this financial year) there will be no CGT to pay. If you delay sale until after 5 April 2022 you can go to £84,600 until April 2023.  Above that, you'd pay 18% or 28% of the value of the increase (not of the sale value). You can claim for some maintenance and repair costs against the CGT too. It will therefore always be worth your while trying to get the best possible price for the property. 

TBagpuss

sammyjammy said:

james_uk said:

Sorry i didn't realise i actually have a copy of the IHT205 form, so on this it states:

£60,000 in the bank although i am not sure if this is a deffinite figure as i knew of an amount that was a little under £50,000 but the bank told me there was a 2nd account that took it over 50 and that is why a grant of probate was needed. i still do not have this yet and they wouldn't say at the tiime how much was in this second account, i got the impression it only took it a bit over 50.

Value of the freehold/leasehold residence of the person who has died if owned in their sole name or as tenants in common

£60,000 (there is a potential that the house could be sold for a little more than this) i havn't had it valued yet  but it isn't in very good condition and needs a lot of work, but i have been told other similar houses in the area have been sold for between 60 - 70,000

gross value of assets not included (above) £123,000

Expenses: £4000 for funeral

net estate of value in the uk for grant of representation £119,000

gross value for IHT purposes £123,000

net qualifying value for accepted estae 119,000

So does that mean if i sold the house for more than 60,000 i would have to pay IHT? and in that case would i be best selling for exactly £60,000 if the price was just a little over 60k to avoid paying this?

And also what if when the grant of probate comes back from the bank that is anything over £60,000? will i also owe IHT on that as well?

James

No inheritance tax as its below the threshold, no CGT payable unless you sell the house for more than £72,300.

SammyJammy is right, also remember CGT is only paid on the *gain* so if you sold for (say) £75,000 then your total gain would be £75,000-£60,000 (the difference between the value as at grant of probate, and the sale price) so 15,000. Your CGT allowance would mean the first £12,300 so the amount you would pay tax on would be £2,700 (£15,000-£12,300).The tax rate is 18% or 28% (depending on your income tax rate) so you would in that example pay either £486  or £756.

BooJewels

To expand @TBagpuss - as I understand it, you can knock off any fees incurred in selling it too - including valuations done for probate, conveyancing and estate agents.  I've just tried the Government CGT calculator and it mentioned the fees for valuations done at the time of inheritance.

Can someone please confirm, as I haven't found any official reference to it, the comment @Owain_Moneysaver made a couple of posts back - that the estate can claim up to 3 years allowance?  My father passed just inside the new 2020/2021 tax year and we really hope to sell his property before April 2022, so on that basis, we'd have 2020/2021 allowance and for 2021/2022 = £24,600?  But @Thrugelmir earlier said the estate only had one allowance?  So I'm a bit confused.

It would help us financially if we got 2 years worth, as we're likely to be up around £20k to £25k.  After conveyancing and EA fees, that would dip us below the 'double' threshold.  After that, if it becomes payable, I'll be pretty happy to do so, as it means we've got a very good price for it.