Capital Gains Reporting (Self Assessment)

formwrangler

Just trying to understand where I need to report Capital Gains made on an inherited property.

I inhertited a property where my brother and I are the executors / beneficiaries.  Once we sell it seems likely that there will be some Capital Gains to report to HMRC.

I understand that as there are two of us we split the profit value 50/50 and do a Capital Gains report each based on our 50% of the proceeds.  

I'm self employed so on my side, do I need to do a CG report within 60 days to HMRC or do I do it via my Self Assesment submission for the year?  I've searched around and can't find what the rule is (probably phrasing it wrong, it'd be nice if HMRC fixed their Community Forum...)

Thanks for any pointers, links etc

Bookworm105

is the estate selling it as the estate, or are the beneficiaries selling it after it has been distributed to each of them?

Keep_pedalling

How did you value the property for probate / IHT return? Unless the estate is in or very near IHT territory it is advisable to value the property on the high side to avoid a CG liability. 

If the house has already been sold by the estate then it is the estate that has the liability not the beneficiaries. How far into the process are you?

formwrangler

Hi

So the property was valued for probate / IHT using a red book / market value so it isn't on the high side. Seemed to be the most accurate way to do it if we ever get challenged at a later date.

Probate has been granted and the house isn't up for sale as yet, I'm just trying to get a grasp of the process.

Bookworm105

formwrangler said:

Probate has been granted and the house isn't up for sale as yet, I'm just trying to get a grasp of the process.

doesn't really answer the question who is the seller, but hey ho

please read:
Report and pay your Capital Gains Tax: If you sold a property in the UK on or after 6 April 2020 - GOV.UK (www.gov.uk)

Keep_pedalling

The best way to avoid an HMRC challenge for IHT purposes is to obtain a RICS valuation. If the estate was in IHT territory then you could be looking at a demand for more IHT rather than CGT. 

Assuming that is not the case then rather than transfer the property into your own names you can use a deed of appropriation to share the gain and take advantage of each of your allowances. This must be put in place before the exchange of contracts for the property, but the cost of doing this might not be worth it if the gain is a small one.

 

formwrangler

Sorry @Bookworm105 - my brother and I (the executors) will be selling the property

formwrangler

Thanks @Keep_pedalling I'll have a look at that. The valuation we have for the IHT is indeed a RICS one.

If we do go for the deed of appropriation do you know if my share of it needs to be reported via the self assesment form or as a CG report report within 60 days?

Bookworm105

formwrangler said:

Sorry @Bookworm105 - my brother and I (the executors) will be selling the property

so, taking your comment at face value (do you really understand the question), the estate will be making the sale, not the beneficiaries 

that is tax inefficient since an estate gets only one CGT allowance (which has a time limit to claim it anyway) against the full gain and is charged at 24%.
Whereas each beneficiary gets a personal allowance (no time limit) against their share of the gain and is taxed at 18% and/or 24% depending on the circumstance of each person and size of their share of the gain


if the estate makes the sale then a CGT return within 60 days must be done and a tax return may need to be done depending the circumstances. read: Dealing with the estate of someone who's died: Reporting an estate’s income to HMRC - GOV.UK (www.gov.uk)

if the beneficiaries make the sale then a CGT return within 60 days must be done and a tax return must be done for the end of that tax year - please read link already given 

formwrangler

Bookworm105 said:

formwrangler said:

Sorry @Bookworm105 - my brother and I (the executors) will be selling the property

so, taking your comment at face value (do you really understand the question), the estate will be making the sale, not the beneficiaries 

Oh, perhaps I don't understand the question therefore...

The situation is the named executors on the probate certificate are my brother and I.  We are also the beneficiaries as in we are named in the will and the monies from the sale of the property will be divided between us 50/50.

Therefore the beneficiaries are making the sale unless I've really missed the difference between estate and beneficiary?

sheramber

Has the property been transferred to  the benficiaries by updating the land regisstry of the transferr of title?

If it has then the owners- your brother and you  - are selling it

If the property is still in the name of the deceased then it is the estate that is selling it and you- are selling as executors, not as beneficiaries