Capital Gains Tax on Inherited House

Stringybob3

We sadly lost my mother in law's earlier this year and have inherited her house. When we applied for probate we got 3 estate agents to value the house and it was set as £180k (which we thought was very low at the time, but had a lot going on and didn't question it, as we didn't quite realise the CGT implication of this value). We have now agreed to sell the house for a price of £220k, so after fees etc. there is going to be CGT to pay on the "profit" of approx. £35K. As well as the house there is approx. £30k of cash in the estate.
The house has been left to my wife and there is a sum of £25k each (i.e. £50k) to go to my two children. My question is this - does the £50k inheritance that is going to the kids affect the CGT? I guess not, but thought this place would be a good place for a bit of a steer. Thanks.

RAS

You can deduct the cost of selling from the profit and the estate has a £3k CGT allowance. Then 24% tax to pay within 60 days.

Stringybob3

Thanks RAS. Yeah that's what I thought (me and the wife can both use our £3k CGT allowance I believe?). I was just wondering, as there are other beneficiaries as well as my wife, whether this was taken into account in any way?

Keep_pedalling

CGT applies to the house only, it does not affect your children’s inheritance at all. For any estate well under IHT territory it is always best to over value a property to avoid this exact situation. 

Stringybob3

@Keep_pedalling I realised this too late !! Never mind, the tax man always gets it one one way or another

p00hsticks

Stringybob3 said:

 (me and the wife can both use our £3k CGT allowance I believe?). 

Only if the house has actually been transferred into the names of you and your wife prior to the sale. If it is still in the name of the deceased then the estate has a single £3k CGT allowance (providing I think that it is sold within two(?) years of death.)

Stringybob3

Ahh right, thanks for that info @p00hsticks this is new territory for us!