Capital Gains Tax question

FlorayG

I'm learning a lot from this forum; two questions
First  question - if you leave a person a house in your will and they sell it and they already have a house of their own, do they pay CGT on the sale?
Second, if the answer to the above is 'yes', would they pay CGT on non-residential property? ( I have a field with no buildings on it I want to leave to somebody, but if they will pay CGT I will have it included in my estate instead and leave them a percentage)
I do understand about 'what if you no longer own that when you die' argument, I'd just like clarity on the actual question, please

Keep_pedalling

Not if they sold it immediately at the probate valuation. If sold some time later CGT would only apply on any gain in value after your death. Those are the current rules at least, but changes in CGT rules may come about as soon as the October budget. 

RAS

Your executors will need to value the field at the time of your death. If the beneficiary chooses to sell it, they pay CGT on any uplift in value since your death.

That might be nil, or a little bit. Although if they sell to a developer with planning permission, it may be a lot.

If this field is contiguous to the house, you need to ensure that the property deed is explicit about access rights to the field, which means looking at both the field and house deeds. That could affect the value of both, or scupper use of the field.

FlorayG

RAS said:

Your executors will need to value the field at the time of your death. If the beneficiary chooses to sell it, they pay CGT on any uplift in value since your death.

That might be nil, or a little bit. Although if they sell to a developer with planning permission, it may be a lot.

If this field is contiguous to the house, you need to ensure that the property deed is explicit about access rights to the field, which means looking at both the field and house deeds. That could affect the value of both, or scupper use of the field.

It's not by the house and has it's own access so that's not a problem. Worried though about 'valuing the field' at the time of my death, because around here the only way to find the value of grazing land is to offer it for sale - it usually goes for up to twice the valuer's 'guide price'. I know right now it would be officially valued at about £35k and I know I could get £45k for it easily and maybe more

RAS

Is your whole estate likely to exceed the IHT limit? 

If not, and your executors are well informed about the local market, they'll value it at the higher value. Still no IHT to pay and reduces the amount CGT due down the line. 

If you are over the IHT limit you need to think about whether you want to stipulate that the estate pays the IHT on the whole estate but encourage the executors to use local pricing? 

But it won't matter unless the beneficiary wants to sell. 

FlorayG

RAS said:

Is your whole estate likely to exceed the IHT limit? 

If not, and your executors are well informed about the local market, they'll value it at the higher value. Still no IHT to pay and reduces the amount CGT due down the line. 

If you are over the IHT limit you need to think about whether you want to stipulate that the estate pays the IHT on the whole estate but encourage the executors to use local pricing? 

But it won't matter unless the beneficiary wants to sell. 

I am over the limit but I'm leaving the bulk of my estate to charity so it won't have to be paid. Executors won't be allowed to value it surely that has to be done by a professional?
The idea is that they keep the field until they really need the money, because the price of land here goes up and up every year, so it will be a better investment for them than leaving them actual money. They won't have a use for the field themselves

RAS

Just make sure that they understand how to avoid creating an agricultural tenancy by accident, as that would devalue their inheritance.

FlorayG

RAS said:

Just make sure that they understand how to avoid creating an agricultural tenancy by accident, as that would devalue their inheritance.

That can't happen because it isn't agricultural land and there's no dwelling on it

RAS

That's safer then. Just for note an agricultural tenancy relates to land only as well. Someone got permission to graze land, then failed to remove livestock over several years. The owners didn't understand the implications. 

FlorayG

Anyway to return to my original question - how would my executors get a 'real' valuation and not an 'official' one? It doesn't seem fair if a valuer says it's worth say £50k and then they sell it a week later and get £70k for it and have to pay CGT on £20k
For context; before I bought this, I bid on one that was marketed at 'guide price £64k'. I bid £75k and didn't get it. I later met someone who had bid £84k and didn't get it. Rumour has it went for near £100k, but you can see how useless 'valuation' is

Linton

FlorayG said:

Anyway to return to my original question - how would my executors get a 'real' valuation and not an 'official' one? It doesn't seem fair if a valuer says it's worth say £50k and then they sell it a week later and get £70k for it and have to pay CGT on £20k
For context; before I bought this, I bid on one that was marketed at 'guide price £64k'. I bid £75k and didn't get it. I later met someone who had bid £84k and didn't get it. Rumour has it went for near £100k, but you can see how useless 'valuation' is

The only "real" valuation is obtained by a competitive sale of the land, which rather defeats the objective in getting a valuation in the first place.  Anything else is an opinion. HMRC resolve this problem by finding an independent experienced valuer who does not benefit from the valuation and would suffer if they repeatedly came up with demonstrably incorrect assessments. What else would you suggest?