CGT form query for inherited property sold with Deed of Appropriation

itm2

My sister and I inherited my late mother's home when she passed away a few months ago. The house has just been sold, and we had a Memorandum of Appropriation created. I am now filling in the CGT declaration for HMRC, and one of the questions is: "What date did you get the property? (This is the date the property was transferred into your name)".
Since the property was never transferred into our names (it was sold directly by the estate of my late mother), what date should I enter here?

theoretica

If it is being sold directly from your mother's estate then the *estate* not you and your sister will be the thing to pay CGT (and I believe only get one CGT allowance, not one for each of you).  So I believe you fill in the form as the estate owns it - and will have done from the date of death.

However - has the value of the property increased while the estate owned it, or do you think the valuation for inheritance tax was incorrect?  Was it formally valued, or was the value estimated?

itm2

The purpose of the Memorandum of Appropriation was to declare that the property as being sold by the estate, on behalf of the beneficiaries. This allows the beneficiaries to make use of their individual CGT allowances. So I assume that means that the beneficiaries (i.e. my sister and I) need to make the CGT declarations?

The property was valued for Probate purposes by an RICS surveyor. The sale price achieved was significantly higher, however.

EDIT: I've just tried completing the form as the estate, and there is no way for the beneficiaries to claim their own individual CGT allowances.

shiraz99

I'll be interested on how this goes as I may also go down the Deed of Appropriation route next year.

Can I ask how you went about getting the DOA and how much did it cost you to do?

itm2

shiraz99 said:

I'll be interested on how this goes as I may also go down the Deed of Appropriation route next year.

Can I ask how you went about getting the DOA and how much did it cost you to do?

I asked my solicitor to create it. They charged me £300, but it was half a page of straightforward text so basically a bit of a ripoff. It's the sort of thing that almost anyone could create from a bit of boilerplate text.

shiraz99

Have both yourself and your sister appropriated the entire estate in equal share or has the estate retained a percentage. I could be totally wrong but it's my understanding that if all beneficiaries have appropriated the estate then it's for them alone to make their own CGT declaration using the date they appropriated the asset and the value as of the grant of probate, just as if the property had actually been transferred to them.

itm2

shiraz99 said:

Have both yourself and your sister appropriated the entire estate in equal share or has the estate retained a percentage. I could be totally wrong but it's my understanding that if all beneficiaries have appropriated the estate then it's for them alone to make their own CGT declaration using the date they appropriated the asset and the value as of the grant of probate, just as if the property had actually been transferred to them.

We are joint beneficiaries of the entire estate, but the house was never transferred into our names. Hence the need for the Memorandum of Appropriation. It's the question about the date of acquisition that is stumping me ("the date the property was transferred into your name"), as the property was never transferred into my/our name.

shiraz99

itm2 said:

shiraz99 said:

Have both yourself and your sister appropriated the entire estate in equal share or has the estate retained a percentage. I could be totally wrong but it's my understanding that if all beneficiaries have appropriated the estate then it's for them alone to make their own CGT declaration using the date they appropriated the asset and the value as of the grant of probate, just as if the property had actually been transferred to them.

We are joint beneficiaries of the entire estate, but the house was never transferred into our names. Hence the need for the Memorandum of Appropriation. It's the question about the date of acquisition that is stumping me ("the date the property was transferred into your name"), as the property was never transferred into my/our name.

I understand that which is why I've asked what did the document state about the percentage of appropriation. It's often advisable for the estate to retain a percentage of the estate but if you both have appropriated all of it as beneficiaries then the estate doesn't make the CGT declaration, you both do. The date of acquisition is the date of the appropriation. You treat it the declaration as if you have had the property transferred into your names, even though you haven't.

itm2

The declaration states:
"Under the terms of the Will, (I) and (my sister) are jointly entitled to the net sale proceeds of the property.

As from this date I, (me), as executor of the estate declare

that I hold the property as ‘bare trustee’ for the beneficiaries and not as the personal representative of (my mother)"

I was the only executor named on the Grant of Probate, although my sister and I were joint executors.

So do I use the date that I signed the Memorandum of Appropriation as the date of acquisition?

shiraz99

This is my understanding, yes.

ljayljay

Just to jump in on this as I am in a similar position & had my solicitor draw up a 'Deed of Appropriation' for myself & two siblings. They were also joint executors with powers reserved & the three of us were the only beneficiaries to the estate. (Cost approximately £200). NB I was also told to use the date I signed the Deed as the operative date for the property being appropriated equally to the three of us.

We have since sold the property & intend to use our own CGT allowances to cover the whole gain. As such I believe there will be no CGT to pay. However, since each of our share exceeds 4xCGT allowance I understand there will still be a requirement to do a self-assessment next year to declare the property sale during the 22/23 TY. Have I have understood this correctly?

Additionally, my solicitor has written to advise that the Deed means I held the property as a bare trustee (NB the Grant of Probate is just in my name).

They go on to advise 'There are new requirements that Trustees register Trusts with HMRC. This includes some type of property trusts where the beneficiaries are different to the legal owners of the property. Registration should be done within 90 days of setting up the Trust. A Government Gateway organisation ID will need to be set up for each Trust.'

Does anyone have experience of having to register the 'Deed of Appropriation' in these circumstances? If so, I better get on with it as I signed the Deed in mid-September & the 90-day deadline is fast approaching.

The solicitor also provided this link, but I have yet to read in detail.

https://www.gov.uk/guidance/register-a-trust-as-a-trustee