CGT query re Inherited House

gettingtheresometime

Hoping someone can help me as my brain is so fogged up at the moment.

My FIL died in 2005 and left the mortgage free family home in trust with the residual beneficiaries of that trust being my SIL and husband.

Unfortunately my husband died at the beginning of the month and as events have unravelled it looks like the terms of the trust will allow for the property to be sold.

I've been told by the trustees that his share of the house forms part of his estate although I've not been told what value I should quote but would his estate have to pay any CGT on any increase in value on that share? 

It's slightly complicated by the fact that there is a legacy to pay to a 3rd party - at the moment we're toying with the idea of buying that party out and completing the sale ourselves - if we did that, how would be the best way of registering the house so that my SIL minimised her CGT liability?

TIA

Jeremy535897

If your husband's share formed part of his estate for inheritance tax, it seems that he had an interest in possession in it, and therefore his share would be uplifted to its market value at the date of his death, with no tax to pay. You should seek confirmation from the trustees.

Your second question is more complex, and depends on the nature of the current interests of your sister in law and the third party. Generally speaking, extra transactions create the potential for extra liabilities.

gettingtheresometime

Jeremy535897 said:

If your husband's share formed part of his estate for inheritance tax, it seems that he had an interest in possession in it, and therefore his share would be uplifted to its market value at the date of his death, with no tax to pay. You should seek confirmation from the trustees.

Your second question is more complex, and depends on the nature of the current interests of your sister in law and the third party. Generally speaking, extra transactions create the potential for extra liabilities.

Thank you for that...I'm guessing that if that scenario applies to my husband's share it follows on that the same happens to my SIL share as well so am I right in assuming that so long as any increase in value of the property is less than her allowance, she'll be ok?

basically what we're trying to do is think of a way of 'paying off' the 3rd party her share of the property value, so we can sell the property ourselves as we have no faith in the trustees doing a decent job given the cack handed way they've behaved so far.

Jeremy535897

At present, the house is owned by the trustees. Assuming there are three life interests, and two of the life tenants are alive, the trustees' base cost is the value of the house for probate in 2005 (for the interests of your sister in law and the third party) and the value at the date of death of your husband (presumably one third). Without knowing the terms of the trust, I don't know what the trustees have to do with the third your husband had an interest in. You need to take professional advice.