Prolonged Probate & Planning Permission

bubby08

Oh sorry I thought I read somewhere it was 350K I got that completely wrong 😂

RAS

bubby08 said:

Oh sorry I thought I read somewhere it was 350K I got that completely wrong 😂

You're thinking of the basic allowance for IHT, although that can be anything up to £1m in some instances.

Your mum needs to work out now how she is going to fund any CGT charge, as there is only a 30 day window in which to pay. 

EasySolution

One of the more positive changes in the recent budget is that 30 days has been doubled to 60 days.

bubby08

Everywhere I have read it states the threshold for IHT is 350K can you explain or point me In the direction of reading as to why this isn’t real MT4 in my mums case and why she is going to have to pay CGT.

thanks in advance 

Savvy_Sue

IHT and CGT are different taxes.

The estate seems not to be liable to IHT, but your mother is disposing of an asset (a house) which is worth more now than when it passed to her. It doesn't matter how she got that house: it's worth more now than when she first owned it. 

If it was her Principal Private  Residence, no CGT would be due. 

Forget IHT. Re-read the explanations already given and see if they make more sense.

Keep_pedalling

bubby08 said:

Everywhere I have read it states the threshold for IHT is 350K can you explain or point me In the direction of reading as to why this isn’t real MT4 in my mums case and why she is going to have to pay CGT.

thanks in advance 

IHT and CGT are totally separate taxes. You pay CGT on an asset when you dispose of it. The tax you pay is based on the gain between the value at the point you obtained the asset and the date you disposed of it. Your mother will have been deemed to take ownership on the date of death of the previous owner and the day she gifts it to you.

If she did not do that and left it to you in her will CGT would no longer apply but it would be included within any IHT calculations.

You could also be hit with a double whammy if she gifted it to you then died within 7 years as she would be liable to CGT when she gifted it, and her estate could be liable to IHT on the value of the gift under the 7 year rule.

bubby08

Ok I think I follow now, however she only became the owner of the of the property once probate was completed. And even at this point she is not the owner because we don’t know what to after we have received the letters of administration. I am trying to explore that now also

Keep_pedalling

Despite the long delay in administering the estate the starting point for valuation is the date of death of the testator otherwise people could simply avoid CGT by not winding up an estate.

RAS

The same CGT issue is hitting quite a lot of estates now, because house prices have risen a lot in the last two years. The increase in value between death and transfer/sale often exceeds the CGT allowance more often.

Obviously, the longer the delay in sale, the more risk of a CGT liability.

bubby08

Ok thanks, what is the next stage once probate has been processed letter of administration has been issued?