Capital Gains Tax - Help please!

Spitfires26

Hi Everyone, 

I am hoping you can help with some Capital Gains Tax help. 

Myself and 3 other siblings are executors of my Dad's estate as he passed away last year. 

For probate the house was valued at £550,000 and the house is now on the market for £700,000. So my understanding is that we will be hit with CGT on the £150,000. 

For contrast, myself and one other sibling have lived in the house the whole time, both before and after his death, my other two siblings have their own houses. (If this changes anything)

I know there is a tax allowance which is £12,300, is this per person which are executors/benficeries? So would it be £12,300 X 4 = £49,000? Or is the tax allowance just the once so it would be anything over the £12,300 be charged at the 28% capital gains tax amount? 

We have had some work done to the house like a new kitchen, which I know can be taken off due to increasing it's value, but I would like to understand how much we are expected to pay. 

All probate etc has been done by us and we have not used a soliciter - so just wanting some guidance on this. 

Thanks so much in advanced

Alex

dimbo61

Well you each have your own Capital Gains Tax allowance so yes 4X £12,300 or £49,200
Now the selling costs are also tax deductible.
However if the property has gone up by £150,000 in the last 12 months then you will have to pay the Capital Gains Tax within 60 days I believe.
Speak to your solicitor.

Depending on how much each one of you earn you might pay 18% or 28% 

https://www.gov.uk/capital-gains-tax/rates

Keep_pedalling

That is a big gain in such a short time. how was the house valued for probate? Had the house been valued for probate @ £700k would that have led to an increase in IHT due?

Spitfires26

dimbo61 said:

Well you each have your own Capital Gains Tax allowance so yes 4X £12,300 or £49,200
Now the selling costs are also tax deductible.
However if the property has gone up by £150,000 in the last 12 months then you will have to pay the Capital Gains Tax within 60 days I believe.
Speak to your solicitor.

Depending on how much each one of you earn you might pay 18% or 28% 

Thanks for this Dimbo! 

I didn't know this. So if I am on Basic tax rate, for example my work pay, then from receiving money from the estate this would push me above the basic tax rate, meaning future pay slips would means I am charged the higher rate of tax too? 

Have I read this right? 

I am on basic tax at the moment, earning under the £50K - but of course, recieving this money from the house sale would push me way above...

Spitfires26

So we had 3 estate agents value the property between £550 - £600K we did opt for the lower end due to IHT. We have since improved the property with a new kitchen etc. However I belive that when estate agents value a property for Probate reasons then this is typically lower and more of a general market value?  Seems to be tax on everything, it's madness!

Keep_pedalling

Spitfires26 said:

dimbo61 said:

Well you each have your own Capital Gains Tax allowance so yes 4X £12,300 or £49,200
Now the selling costs are also tax deductible.
However if the property has gone up by £150,000 in the last 12 months then you will have to pay the Capital Gains Tax within 60 days I believe.
Speak to your solicitor.

Depending on how much each one of you earn you might pay 18% or 28% 

Thanks for this Dimbo! 

I didn't know this. So if I am on Basic tax rate, for example my work pay, then from receiving money from the estate this would push me above the basic tax rate, meaning future pay slips would means I am charged the higher rate of tax too? 

Have I read this right? 

I am on basic tax at the moment, earning under the £50K - but of course, recieving this money from the house sale would push me way above...

As the house is your primary residence then you would be exempt for CGT on this sale. I am assuming that the house has been transferred to the beneficiaries, but if it is sold by the executors while still being owned by the estate then the estate pays the tax and that exemption won’t apply.

Slithery

Has the property been transferred to the beneficiaries or is it still owned by the estate?

Spitfires26 said:

So we had 3 estate agents value the property between £550 - £600K we did opt for the lower end due to IHT. We have since improved the property with a new kitchen etc. However I belive that when estate agents value a property for Probate reasons then this is typically lower and more of a general market value?  Seems to be tax on everything, it's madness!

Never a good idea, especially with it being so close to the IHT limit.

You should always get it valued by a RICS qualified surveyor as they will be liable if HMRC decide that it's been undervalued. EA's have no training and won't be liable if they get it wrong.

Keep_pedalling

Spitfires26 said:

So we had 3 estate agents value the property between £550 - £600K we did opt for the lower end due to IHT. We have since improved the property with a new kitchen etc. However I belive that when estate agents value a property for Probate reasons then this is typically lower and more of a general market value?  Seems to be tax on everything, it's madness!

Then I think you can expect HMRC to come back at you for more IHT. 

Spitfires26

This sounds like it will be fun! 

The IHT Tax is £490K or so when being passed to Children and I believe we are way below this. There is then a £250K Mortgage still to be paid off the property. 

Thanks everyone

Slithery

dimbo61 said:

Well you each have your own Capital Gains Tax allowance so yes 4X £12,300 or £49,200

Only if it's already been transferred into their names, which doesn't sound like the case here.

The executor is a single legal entity so only one lot of CGT allowance will be available.

saajan_12

Who's name is it in currently and who is living there?