CGT query

Burtbot

We are selling my dad’s property. During probate, the solicitors obtained a single valuation of £450k (incorrectly based on it having 3 bedrooms instead of 4), and used this for the estate valuation.

When preparing to sell, we got three estate agent valuations of £600k, all within six months of the original figure. We informed the probate solicitors, sent them the new valuations, and they advised that no CGT would be due because the new valuations were close in time to the original one.

However, the estate documents still list the house at £450k. Does this mean we'll owe CGT on any sale above £450k? The solicitors say no, because we have the three updated valuations as evidence. If that's correct, how would we present this proof when selling and reporting?

Keep_pedalling

On your previous thread back in October last year you were advised to seek professional advice did you do that? 

Was an IHT return required originally? If not does this corrected  valuation take the total value of the estate over £650k 

Burtbot

OH god, I totally forgot I created a thread on this already  Well spotted. 

Well I went back to the original solicitors who said we wouldn't need to pay CGT. They checked with their legal team who said we don't. But now I'm confused again as I don't understand how this works without the 600k on the estate docs. 

we dont owe inheritance tax as whole estate is under £1mill

Burtbot

Just seen the old thread and some comments on there which I hadn't read, so that's helpful! So looks like there's no actual way around this other than to get an accountant who knows about these things, and a RCIS survey? 

When I emailed the solicitors this is what they came back with 

If the house had sold whilst we were working on the estate, you had already provided further estate agent valuations that were quite different to the one I sourced.  We would therefore not pay any CGT based on this evidence.  We do not need to provide it to any institution, unless it was asked for and I do not believe it would be asked for.

As you have now resumed your roles as administrators for the estate, you will not pay any CGT for this reason.  

In the process of probate that we follow, CGT is not called upon from HMRC, it is a process that we must follow.  If HMRC were to make contact with you, you have the evidence that the property was under valued for probate.

I can totally understand that you are concerned but nothing wrong has been done.  We are not avoiding paying any CGT, it is simply an error occurred at valuation that can be proved so.

Keep_pedalling

Burtbot said:

OH god, I totally forgot I created a thread on this already  Well spotted. 

Well I went back to the original solicitors who said we wouldn't need to pay CGT. They checked with their legal team who said we don't. But now I'm confused again as I don't understand how this works without the 600k on the estate docs. 

we dont owe inheritance tax as whole estate is under £1mill

That may be the case but if the estate was over £650k (assuming he inherited everything from his wife) then an IhT return needs to be done in order to claim the residential NRB. So if the original valuation was below that value but over it with the correct valuation of the family home then one needs to be done now 

Burtbot

Thanks @Keep_pedalling. The estate may not be over 650 as the house offer is 510. But that's really good to know and I'll look into that now.

Keep_pedalling

Burtbot said:

Thanks @Keep_pedalling. The estate may not be over 650 as the house offer is 510. But that's really good to know and I'll look into that now.

What was the original total value of the estate for probate? As no IHT return will have completed the value of the estate would not be broken down into its component parts on the probate forms so HMRC will be totally unaware of that original valuation.