Sell a house I am executor for, ‘cheap’ to a member of my family

BiturboV12

 Has anyone ever been an executor to the sale of a property and considered letting a family member have it well below market price.
Is it legal?  I guess it’s somewhat immoral too. If it can be done how?

maisie_cat

If the executor is the sole beneficiary they can sell for whatever price they are happy with. But the market value must be used for probate.

Flugelhorn

BiturboV12 said:

 Has anyone ever been an executor to the sale of a property and considered letting a family member have it well below market price.
Is it legal?  I guess it’s somewhat immoral too. If it can be done how?

presume you are exec to the will ? how many beneficiaries and are you one of them? If you are sole exec and beneficiary you can do what you like but if there are others then it is the exec's duty to maximise the estate 

MobileSaver

BiturboV12 said:

 Has anyone ever been an executor to the sale of a property and considered letting a family member have it well below market price.
Is it legal?  I guess it’s somewhat immoral too. If it can be done how?

The executor has a legal obligation to sell any assets in the best interests of the beneficiaries.

If the executor is the sole beneficiary or all the beneficiaries agree with selling well below market price then yes it's both legal and morally right to sell at whatever price they wish. If any of the beneficiaries do not agree with selling cheap then the executor is personally liable for making up any shortfall so that the affected beneficiary is not out of pocket.

TBagpuss

As Above, the executor has a legal dty to deal with the estate in accordance with the will and in the best interests of the beneficiaries.

So, you can't sell the house cheap to a family member if by doing so, the beneficiaries would be worse off than if the house were sold for market value, and as executor you could be personally liable to the beneficiaries for the loss, if you di.

However: If you are the sole beneficiary, as well as the executor, then you could sell the house at an undervalue, as you would  effect be gifting them with the difference between what they paid and what the house was worth, out of your own pocket.

If the person you want to sell to is a beneficiary, then you can sell the house to them as long as the other beneficiaries are not disadvantaged as a result, so, suppose for the sake of argument, if there was a house worth £300,000 and the estate was to be divided between 3 beneficiaries, you could sell the house to beneficiary A for £200,000 and then beneficiaries B & C would each get £100,000, the same as they would if the house were sold on the open market, Beneficiary A would get £100,000 of equity.

If you were beneficiary B you could also of course chose to sell the house to A for £100,000, C would get the £100,000, A would end up with £200,000 equity and you would get nothing, having effectively gifted your share to A. 

Keep_pedalling

Is the estate in IHT territory? If so you can’t duck this by selling the property under market value, you still have to declare the actual value on the IHT return.

theartfullodger

HMRC may decide to tax sale (IHT, CGT...) at market value.  

There's also problem that if sale is accepted at low value, later calculation of eg CGT may become painful.. .(purchaser may decide to rent it out, or who knows what chancellor decides to do with CGT rules)

km1500

HMRC **will** require you to use market value for IHT calculations. The purchaser will.in turn be required to use market value for stamp duty purposes, but the actual purchase price should any future CGT calculations become necessary.

FreeBear

theartfullodger said: who knows what chancellor decides to do with CGT rules

Capital Gains Tax allowance is going down to £3,000 next year - I suspect he would like to get rid of the allowance completely and charge you 20% on any/all profit you make. But there will be loopholes that his rich buddies can exploit to reduce any liability to zero.

BiturboV12

So here is the thing. If I sell the house to a family member cheap, the beneficiaries are charities. I believe they employ people to go on the hunt for money where  they fell they’ve been short changed on?

user1977

BiturboV12 said:

If I sell the house to a family member cheap, the beneficiaries are charities. I believe they employ people to go on the hunt for money where they fell they’ve been short changed on?

Yes, so obviously you can't do it in this case (unless for some reason the beneficiaries all agree).