CGT on probate house

shiraz99

uknick said:

shiraz99 said:

Keep_pedalling said:

shiraz99 said:

You have the allowance for each tax year you have the property for. So if the death was, for example in March this year, and you sold the property in Jun 2023, you'll have the allowance for 2021/22, 22/23 and 23/24 tax years.

CGT allowances can’t be carried over you only get the allowance for the year the asset is sold.

Are you sure about that?

It is more than a little confusing with regard to the carrying forward of the CGT allowances.  HMRC don't help with their online notes.  But, as this link confirms, allowances don't carry forward year on year.

How does the personal representative deal with the income and capital gains arising after the deceased’s death? | Low Incomes Tax Reform Group (litrg.org.uk)

"What tax is payable on the gains arising during the period of administration?

During the period of administration, capital gains tax (CGT) applies to gains on any assets disposed of by the estate except for assets transferred to the beneficiaries. You can read above on when any gains need to be reported to HMRC. Personal representatives might need to dispose of assets to release money to pay debts, for example. Gains arising on the disposal of any assets are calculated by reference to the sales proceeds less the value at death.

Personal representatives get a full annual exemption amount (£12,300 for 2022/23) for the period from the date of death to the following 5 April (no matter how short this period is).

To the extent the administration period continues into the next two tax years, the personal representatives will also receive the full amount of the annual exemption in each of the following two tax years. If the administration period lasts longer than this, no further annual exempt amount is available. The annual exemption is only available to set against gains realised in a particular tax year, any unused annual exemption does not roll over to the following tax year."

I will stand corrected though if someone can point to the legislation overriding the usual rules on carrying unused allowances forward.

I've read that before and that's the bit that confused me, on the face of it it looks like you can have additional allowances but reading on it's clear that that's not the case. Thanks for that and apologies for doubting anyone.

Maybe one thing I could ask on the subject, and hopefully the OP wont mind. I understand that the personal representative can use their allowance if the property is sold during the administration period but if their are multiple beneficiaries is there a way to use their allowances without actually transferring the property into their names first. I'm sure someone on here mentioned some sort of apparatus, like a DOV but not the same, to do this.

Keep_pedalling

shiraz99 said:

uknick said:

shiraz99 said:

Keep_pedalling said:

shiraz99 said:

You have the allowance for each tax year you have the property for. So if the death was, for example in March this year, and you sold the property in Jun 2023, you'll have the allowance for 2021/22, 22/23 and 23/24 tax years.

CGT allowances can’t be carried over you only get the allowance for the year the asset is sold.

Are you sure about that?

It is more than a little confusing with regard to the carrying forward of the CGT allowances.  HMRC don't help with their online notes.  But, as this link confirms, allowances don't carry forward year on year.

How does the personal representative deal with the income and capital gains arising after the deceased’s death? | Low Incomes Tax Reform Group (litrg.org.uk)

"What tax is payable on the gains arising during the period of administration?

During the period of administration, capital gains tax (CGT) applies to gains on any assets disposed of by the estate except for assets transferred to the beneficiaries. You can read above on when any gains need to be reported to HMRC. Personal representatives might need to dispose of assets to release money to pay debts, for example. Gains arising on the disposal of any assets are calculated by reference to the sales proceeds less the value at death.

Personal representatives get a full annual exemption amount (£12,300 for 2022/23) for the period from the date of death to the following 5 April (no matter how short this period is).

To the extent the administration period continues into the next two tax years, the personal representatives will also receive the full amount of the annual exemption in each of the following two tax years. If the administration period lasts longer than this, no further annual exempt amount is available. The annual exemption is only available to set against gains realised in a particular tax year, any unused annual exemption does not roll over to the following tax year."

I will stand corrected though if someone can point to the legislation overriding the usual rules on carrying unused allowances forward.

I've read that before and that's the bit that confused me, on the face of it it looks like you can have additional allowances but reading on it's clear that that's not the case. Thanks for that and apologies for doubting anyone.

Maybe one thing I could ask on the subject, and hopefully the OP wont mind. I understand that the personal representative can use their allowance if the property is sold during the administration period but if their are multiple beneficiaries is there a way to use their allowances without actually transferring the property into their names first. I'm sure someone on here mentioned some sort of apparatus, like a DOV but not the same, to do this.

I am pretty sure there is no other way other than transfer the property, but once the CGT allowance comes down to £3000, the hassle of doing it won’t be worth the tiny gain.

shiraz99

Keep_pedalling said:

shiraz99 said:

uknick said:

shiraz99 said:

Keep_pedalling said:

shiraz99 said:

You have the allowance for each tax year you have the property for. So if the death was, for example in March this year, and you sold the property in Jun 2023, you'll have the allowance for 2021/22, 22/23 and 23/24 tax years.

CGT allowances can’t be carried over you only get the allowance for the year the asset is sold.

Are you sure about that?

It is more than a little confusing with regard to the carrying forward of the CGT allowances.  HMRC don't help with their online notes.  But, as this link confirms, allowances don't carry forward year on year.

How does the personal representative deal with the income and capital gains arising after the deceased’s death? | Low Incomes Tax Reform Group (litrg.org.uk)

"What tax is payable on the gains arising during the period of administration?

During the period of administration, capital gains tax (CGT) applies to gains on any assets disposed of by the estate except for assets transferred to the beneficiaries. You can read above on when any gains need to be reported to HMRC. Personal representatives might need to dispose of assets to release money to pay debts, for example. Gains arising on the disposal of any assets are calculated by reference to the sales proceeds less the value at death.

Personal representatives get a full annual exemption amount (£12,300 for 2022/23) for the period from the date of death to the following 5 April (no matter how short this period is).

To the extent the administration period continues into the next two tax years, the personal representatives will also receive the full amount of the annual exemption in each of the following two tax years. If the administration period lasts longer than this, no further annual exempt amount is available. The annual exemption is only available to set against gains realised in a particular tax year, any unused annual exemption does not roll over to the following tax year."

I will stand corrected though if someone can point to the legislation overriding the usual rules on carrying unused allowances forward.

I've read that before and that's the bit that confused me, on the face of it it looks like you can have additional allowances but reading on it's clear that that's not the case. Thanks for that and apologies for doubting anyone.

Maybe one thing I could ask on the subject, and hopefully the OP wont mind. I understand that the personal representative can use their allowance if the property is sold during the administration period but if their are multiple beneficiaries is there a way to use their allowances without actually transferring the property into their names first. I'm sure someone on here mentioned some sort of apparatus, like a DOV but not the same, to do this.

I am pretty sure there is no other way other than transfer the property, but once the CGT allowance comes down to £3000, the hassle of doing it won’t be worth the tiny gain.

I think what I was referring to is called a Deed of Appropriation.. Under a DOA assets belonging to the estate can be appropriated to the beneficiaries prior to the asset being sold and therefore multiple allowances can be used, I think.

Does anyone have any experience with a DOA and how it works?

snowmen

Keep_pedalling said:

snowmen said:

CGT allowances can’t be carried over you only get the allowance for the year the asset is sold.

Very interesting.
This could be quite an important point where a probate property is sold after the start of the new tax year where the reduction in CGT allowance takes effect.

Which is why it is best to get an accurate valuation for probate and, if It does not impact IHT, to go a little on the high side.

Very true. Good point.
I suppose the problem could come about when the probate process takes longer than expected (as it can do) at a time when house prices are rising.
Could be a nice little earner for the government in that situation.