inherited property probate, IHT and CGT

velgor

Can anyone confirm/clarify my understanding here? Situation is hopefully fairly straightforward:

 - Mother passed away 5 years ago, leaving everything to my father (they were married)
 - Father passed away recently leaving everything jointly to me and my sister
 - Cash assets approx 100k
 - House owned outright, value somewhere in the 350-450k region (hard to tell as it's in need of refurbishment but also has some land which may be a development opportunity)
 - Intention is to sell the house asap

If I understand correctly, the house valuation I use in the IHT calculation for probate will also be applied for CGT purposes on sale. Practically speaking the house won't go up in value between DOD and sale so being liable for CGT would be a nonsense. In this instance, as the estate is worth way less than the IHT threshold (£1m including the unused 325+175k from my mother), it's in my interests to use as high a valuation as I reasonably can.

As this is so far below the threshold (and to save time, particularly as I don't live locally to the property) I wasn't planning on getting a formal valuation but the CGT part has now got me thinking this might be useful.

Have I understood everything correctly and any other advice/guidance on how to proceed?

Thanks!

p00hsticks

As the intention is to sell the property as soon as you get probate, there's no harm in getting estate agents in now to give a valuation with a view to selling.

I agree that it's sensible to value on the high side to avoid later CGT, but my understanding is that claiming the additional £175k x 2 allowances involves having to complete a full IHT return, so worth avoiding if the numbers stack up for you not to need them. 

poseidon1

There is a process to increase probate value to amount received on actual sale per article below

https://crestsurveyors.co.uk/what-happens-if-house-sold-for-more-than-probate/#:~:text=intervention from HMRC.-,Can You Amend the Probate Value?,above the Inheritance Tax threshold).

However the system of submitting a form C4 corrective account mentioned in the article is predicated on the executors having submitted an IHT form 400 in the first place. Indeed IHT 405 supplentary form allows the executors to elect to use the sale price if sold within 1 year of death (box 12f)

However , on the numbers you quote even at the higher end ( £100k + £450k) the estate is well within excepted estate territory  if only claiming the two basic NRBs of £325k each, meaning you avoid preparing and submitting IHT 400 in obtaining probate. This then  rules out C4 corrective if property does sell above probate value.

Might make sense to obtain a RICs red book valuation of the property to see if this might reflect your higher end figure of £450k, taking into account its development 'hope' value. 

Alternatively obtain a few estate agent values ( as suggested by p00hsticks) and see if these get close to your top end  £450k figure.  

Avoiding paying 28% on gains above a £350k ( your lower valuation), does appear to be worth a little effort, bearing in mind there are no IHT concerns.

Keep_pedalling

I would get three ES valuations and go with the highest plus another 10%. You don’t need to use her RNRB, it is better to claim the transferable NRB, as that does not require an IHT return.