Selling property and Capital gains tax

how99

Myself and my two brothers are Executors of my dads estate and the sole beneficiaries. 

He had a house that he was in the process of renovating when he died. 

Our plan is to complete the work and then sell. 

I think I understand that our options are to;
1. Sell the house as ‘the estate’ and then inherit the income from the sale 
2. Inherit the house & then sell

I also understand that we’ll need to pay capital gains tax on any increase in value from the probate valuation. 

My question is - what are the pros/cons of selling the house as the estate vs. Inheriting it as the beneficiaries and then selling?

I’m not sure if there’s anything we need to consider - is one option more straightforward or simpler in terms of paying Capital gains tax? 

Is the main difference that if we inherit the house and then sell, we pay capital gains tax as individuals rather than as the estate? 

Thanks!

Keep_pedalling

If all three of you are currently home owners and you are going to complete the works before selling then it is most likely that it would be better to transfer the property and sell as individuals. You will then be able to use 3 allowances for CGT and will only pay the higher rate if you are HR tax payers or the gain takes you there.

if any of you are not home owners then the downside to doing this is that you lose your first time buyer status. 

You need to make sure you get an valuation of the house in its current condition that HMRC are not likely to challenge (average of 3 EAs is not going to cut it) and you need to make sure the amount of money you spend on finishing the project is going to be greater than gain in value. Nothing your father spent on this house can be deducted from your gain, and not everything you spend can be deducted from it either. For instance replacing any existing boiler is not deductible but installing central heating where none existed before is.

Savvy_Sue

In the light of the above, do think very carefully about whether or not it is worth completing the work your father started. Be very realistic about the time it will take, the amount it will cost, and the emotional energy required. Especially if you're intending to do any of the work yourselves, will there be resentment because one brother is unable to commit as much time / energy to this? If you're hiring contractors, will one of you spend a lot of time organising this? 

Also bear in mind that all the while you're doing this, the house needs to be insured and regularly visited / inspected. Which, obviously, if there's a lot of work going on, isn't going to be so much of a problem, but again, consider what will happen if the whole thing 'stalls'. 

Also remember that whatever your Dad / you do to complete the work may not be to the taste of whoever moves in, so even though you think you've 'added value', if the buyer intends to rip out your new kitchen and start again, they're not going to want to pay that 'added value'. 

If the house is weatherproof, do consider just selling it 'as is'. 

how99

Keep_pedalling said:

If all three of you are currently home owners and you are going to complete the works before selling then it is most likely that it would be better to transfer the property and sell as individuals. You will then be able to use 3 allowances for CGT and will only pay the higher rate if you are HR tax payers or the gain takes you there.

if any of you are not home owners then the downside to doing this is that you lose your first time buyer status. 

You need to make sure you get an valuation of the house in its current condition that HMRC are not likely to challenge (average of 3 EAs is not going to cut it) and you need to make sure the amount of money you spend on finishing the project is going to be greater than gain in value. Nothing your father spent on this house can be deducted from your gain, and not everything you spend can be deducted from it either. For instance replacing any existing boiler is not deductible but installing central heating where none existed before is.

Thanks @keep pedalling. Helpful advice 

- one of us is not a home owner so definitely a consideration for us 

- re. Valuations. Do you mean for probate? We’ve already submitted probate valuation & have probate. My understanding was tax calculated based on difference between probate valuation & sale?