Property value for probate form if only half owned

Cash_Cow

Need to run this by my solicitor again (we did speak but I was unsure when presented with the probate form) 

What what value do you put for a property after the death of your last parent's when you have already inherited half of it after first death?  I know the value we apportioned to me on first death but do I deduct that from the house value for the final parent that shared the house value with me as tenants in common? I.e. is 100% of the house deemed all part of HER estate or do I deduct half the CURRENT value of the house from the total  as only half the house was Mum's?  Or do I just deduct what we apportioned to me after the first death?  We will never be in IHT with this and its just sole beneficiary but need to get the figs right.  Im confused as they ask for values but teh ownership confuses it. Thanks for any advice.

shiraz99

If you actually already own half the house then you subtract your share from your Mum's estate when calculating the probate value. I'm assuming you an actual joint owner with your mum rather than a life interest trust being in place for your Mother.

Cash_Cow

Thanks - that is very clear and appreciated.  It is what I thought as before the more recent more generous family home/child property allowances some IHT might have been payable and this was done as a likely a way of mitigating that at the time of drafting the will.  If you can't deduct it then it would have been pointless. Cheers

NorthYorkie

Value the house as a whole as at the date of your mother's death, deduct 50% to recognise that she only has a half share and then deduct a further 10% to recognise that the property cannot be sold without the agreement of the owner of the other half. See the example at paragraph 18.5 of Section 18: undivided shares - Inheritance Tax Manual - Guidance - GOV.UK (www.gov.uk).

Cash_Cow

Thanks a lot. Appreciated with the link. 

I'm going to get my solicitor or accountant to finalise these figs for me as although there won't be any IHT I want them to be solid - especially if CGT rears its head.  Might CGT be lurking as my initial half share has appreciated over 4 years since dad - my IFA and solicitor suggested no CGT would be due as i inherit my mums half share now.  I intend selling the house. Cheers.

NorthYorkie

Yes, you might have a CGT liability in respect of your original half-share but remember there is a £12,300 annual exemption available

Cash_Cow

Writing to my accountant as we speak but can I ask you why it is 'might' have a liability on my dads half share?  The property went up by £100k in 4 years so I am £50k 'better off' on paper.  My IFA and solicitor suggested there was still no CGT to pay as its now treated as inherited estate (I think) and that the half share had no real value until I could realise it by ending the tenancy in common.  Complex but thanks for any insight.

NorthYorkie

I said 'might' because you hadn't provided any values - you have only now said the property appreciated by £100K.

You need to get your solicitor/IFA to explain themselves. To say that a half share has 'no real value' is nonsense - it has some value although not 50% of the vacant possession value. This is why HMRC allow the 10% discount referred to earlier.

Your base cost for CGT purposes will be the value of the 50% you inherited from your father 4 years ago (for the sake of argument, let's say that was worth £25K) plus the value of the other 50% inherited from your mother recently lets say this is worth £75K. So your total 'cost' is £100K. If you sell the whole property for £150K now, you will have a capital gain of £50K.

In effect there is no CGT on the 50% from your mother but there is on the 50% from your father

Cash_Cow

Thanks a lot.  Clearly there has been layers of poor advice and misinformation.

Can you carry over last years' CGT allowance? Maybe a deed of variation to modify the will and so use the wife's too? Minefield.

theoretica

Did you inherit half the house outright, or did your mother have a life interest in it?  If your mother had a life interest trust that changes all the answers...

NorthYorkie

Cash_Cow said:

Thanks a lot.  Clearly there has been layers of poor advice and misinformation.

Can you carry over last years' CGT allowance? Maybe a deed of variation to modify the will and so use the wife's too? Minefield.

No, if not used the CGT annual allowance is lost - that's why its 'annual'. You are also too late to do a deed of variation on your father's will which would be effective for CGT. Besides which the transfer of a share of an asset to a spouse immediately before a sale runs the risk of being viewed as a sham - see CG18150 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)