House sale & potential Capital Gains Tax

ljayljay

I would appreciate if someone could just clarify if my understanding on tax implications on the sale of my late mother’s house is correct. Not sure if this should go on another forum but thought I would try here first.

As lead executor I have recently obtained probate for my late mother's estate who passed away in December 21. The beneficiaries to the estate are myself & two siblings. Since our intention is to sale the property, we have not changed the land registry title that is still registered in our late mother’s name. Am I therefore right in thinking that if the property sales in excess of the probate value only one CGT allowance will be available to offset any potential gain? If so, would it be a relatively simple process to have the property re-registered into myself & siblings names just before sale completion?

Additionally, I would only know if this would be an issue on receipt of an offer & am thinking it could just complicate & delay a potential sale so would only want to do if substantially worthwhile.

NB there was no IHT payable.

diystarter7

I think you are confusing IHT with CGT.

No CGT on ones main property.

Edit - sorry, are you saying if you split the house via deeds 3 ways and then kept ofr a while and prices went up and CGT?

Keep_pedalling

diystarter7 said:

I think you are confusing IHT with CGT.

No CGT on ones main property.

Edit - sorry, are you saying if you split the house via deeds 3 ways and then kept ofr a while and prices went up and CGT?

This is not their home so CGT does apply. yes, the estate only gets a single allowance. Do all of the beneficiaries currently own their own home? If not there is a big down side in transferring ownership you will be losing your first time buyer status.

Is the house already on the market?

shiraz99

ljayljay said:

I would appreciate if someone could just clarify if my understanding on tax implications on the sale of my late mother’s house is correct. Not sure if this should go on another forum but thought I would try here first.

As lead executor I have recently obtained probate for my late mother's estate who passed away in December 21. The beneficiaries to the estate are myself & two siblings. Since our intention is to sale the property, we have not changed the land registry title that is still registered in our late mother’s name. Am I therefore right in thinking that if the property sales in excess of the probate value only one CGT allowance will be available to offset any potential gain? If so, would it be a relatively simple process to have the property re-registered into myself & siblings names just before sale completion?

Additionally, I would only know if this would be an issue on receipt of an offer & am thinking it could just complicate & delay a potential sale so would only want to do if substantially worthwhile.

NB there was no IHT payable.

I don't think it would substantially complicate things if you transferred the deeds into your and your siblings names although, as mentioned, there could be issues if one of your siblings wants in future to take account of a first time buyer status. Has the price of the house increased so much since it was valued for probate that it would be more than the annual CGT allowance, taking into account this would be a net value, taking into account all fees etc.

ljayljay

Keep_pedalling said:

This is not their home so CGT does apply. - CORRECT

Do all of the beneficiaries currently own their own home? - YES

Is the house already on the market? - NO

I have almost completed the house clearance & was hoping to market the house before the end of June.

Just one additional query, if the estate only has one CGT allowance will the excess be chargeable at the standard rate of 18%? I only ask because all of us beneficiaries have a different CGT allowance i.e. basic rate, higher rate & one lives abroad where no CGT is payable.

Keep_pedalling

ljayljay said:

Keep_pedalling said:

This is not their home so CGT does apply. - CORRECT

Do all of the beneficiaries currently own their own home? - YES

Is the house already on the market? - NO

I have almost completed the house clearance & was hoping to market the house before the end of June.

Just one additional query, if the estate only has one CGT allowance will the excess be chargeable at the standard rate of 18%? I only ask because all of us beneficiaries have a different CGT allowance i.e. basic rate, higher rate & one lives abroad where no CGT is payable.

The rate for residential property for estates is 28% not 18, the same rate applies to higher rate IT payers, and it is 20% for basic rate payers.

Having an ex-pat beneficiary complicates  matters, there maybe no CGT where they live, but UK CGT will apply for their entire gain at 28% as they don’t get an allowance.

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/capital-gains-tax/capital-gains-tax

Any tax saving you make by transferring to the three of you is just going to complicate the sale and in your shoes I would not do it. 

ljayljay

Keep_pedalling said:

The rate for residential property for estates is 28% not 18, the same rate applies to higher rate IT payers, and it is 20% for basic rate payers.

Having an ex-pat beneficiary complicates  matters, there maybe no CGT where they live, but UK CGT will apply for their entire gain at 28% as they don’t get an allowance.

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/capital-gains-tax/capital-gains-tax

Any tax saving you make by transferring to the three of you is just going to complicate the sale and in your shoes I would not do it. 

Thanks, that is interesting especially the potential to open up all sorts of additional complications.

Also most importantly could create delays if we received a decent early offer. In any case an additional gain would still be a positive & not worth the extra stress in changing the title deeds for just a bit less tax.

I am not the non-resident but will pass on the link you have provided for my sibling to digest further. They are neither domiciled or resident in the UK & hasn't been for over 30 years so not sure if that makes a difference.

So just a quick clarification for my understanding - the CGT allowance of £12,300 will be available but any excess will have the higher tax rate of 28% - is that correct?

My own CGT allowance of £12,300 will remain intact should I acquire any additional gains during the year? I only mention this because I also have some land that I may sell at some stage.....but that is for another day!