Capital gains tax

Football56

My mother passed away in October 2023. My sister and I were left her property in her will. The property was owned by my Mum and dad jointly and passed to my Mum following Dads death 15years ago. The property is now up for sale and was valued at £260,000 in November 2023. The property has failed to sell and in agreement with the estate agent the selling price has been reduced to £240,000. My son has now expressed an interest in the property and my sister and I have both agreed that in an effort to help him purchase his first home. we would sell to him for £190,000. I am unsure what the position would be regarding Capital Gains Tax and has anybody been in a simlar position. Should there be a requirement to pay CGT would any body have any idea what the figure would be(if any) based on the above and how do we need to report this to HMRC.

peteuk

Sorry for your loss, hopefully 

Mother died in October 2023, i therefore assume that the property went through probate and that this was granted to you and your sister.
What have you done with the property during the period of Oct 2023 and today? (Has it been on the market since Nov 23 until now)
Your selling to your son for £190,000 as its failed to sell so far.

My understanding is there is no capital gains to pay as its still part of your mother’s estate. You would have been liable for inheritance tax if the whole estate was worth more than £325K (£500K if the house is passed to son/daughter). Which is obviously isn’t and you’re not selling at a lower price to avoid this.  So no inheritance tax.

My father passed in June last year, house on the market for £300K, first offer this month of £215K having lowered the price.   Although we had a copy of his will, not the original probable took a while.  

When you sell the property you will need a solicitor and they will fully advise you on this. Your sons solicitor will also advise him on the costs Including stamp duty (if payable). 

Football56

thanks for reply We have obtained probate and as you state its below inheritance tax. The property went on market end of December. 

Bookworm105

Football56 said:

thanks for reply We have obtained probate and as you state its below inheritance tax. The property went on market end of December. 

assuming the estate declared the Nov 23 £260k value for probate purposes, the fact the estate is now selling it at a "discount" to that initial figure has no CGT implications as it is the estate making the sale.
The estate also appears to be below IHT threshold, so there is no point in going through the process for revising the probate value for IHT purposes as no IHT was due, so a lower value won't lead to an IHT refund!

If it is not being sold by the estate, ie it has already been transferred to the will's beneficiaries names, then the situation would be different, but that scenario appears not to be the case, so is irrelevant (it would involve CGT "connected party" rules since the purchaser is your son)

Football56

Thanks for comments. As it would appear there is no requirement to pay CGT is there are need  to notify HMRC regarding any sale of property.

mybestattempt

This may help:

https://www.gov.uk/probate-estate/reporting-the-estate

Football56

Thanks for all who have contributed to my query. Both answers above indicated no CGT payable as its my late Mothers estate making the sale. I have been rather confused after reading various items regarding CGT which state CGT may have to be paid on sale of inherited or second home sales but not main residence. My assumption was that my sister and I inherited the property by being left in Mums will is this not correct. The deeds of the property are still in my late Mums name and my sister and I are shown on the letter of probate. As this is all new to me just trying to make sure of our liabilities if any regarding CGT prior to selling property. Any further comments would be greatly appreciated

mybestattempt

I hope this explains:

At the moment the property is owned by your late mum's estate and you and your sister are, as executors, administering the estate.

Consequently, the property isn't currently anyone's main residence or second property for capital gains purposes.

There is no need to transfer ownership of the property to you and your sister, the estate can sell it to your son.

If the estate sells the property to your son for less than the probate value the estate hasn't made a capital gain.

Football56

Many thanks for explanation