Inheriting house

marymck

Hello 
My husband has passed away very recently. Although he had been ill, we were told we had 2 or 3 years left. Sadly, he died within weeks.
He left a will leaving everything to me. I believe that means this is an "excepted estate" and I don't have to get everything valued before Probate, nor will I have to pay Inheritance Tax.
But he had recently bought a new house, which is in the process of being renovated. Until the house is finished we have been living "temporarily" in my late mum's house.
The new house is in my husband's name - a conscious, but I now think silly decision -and I'm sure I read somewhere that that means I will have to pay Capital Gains Tax on it.
That would seem very harsh. Is that true?

Brie

Sorry for your loss.  I hope your last weeks together had more good than bad in them.

Is the new property the only one you own?  Or do you own your mom's house too?

Also - I think this may need to be moved but I don't know whether it's better on the property forum or probate one.  I'll follow so I can see opinions before shifting it anywhere.

marymck

Hi Brie thank you very much for replying so promptly. My mum's house hasn't gone through probate yet. (The last few years have been very exhausting and I've felt out of my depth at times.) Mum willed the house to me and my brother (her only children) and it is below the threshold for paying Inheritance Tax.
It was to avoid any tax complications that my husband put the new house in his name only. We'd intended to change it once life was on a more even keel and mum's house was sold.
I pay the Council Tax on mum's house and my husband pays all the bills including Council Tax on the new house.

Keep_pedalling

Any capital gains that had built up on the house would be wiped out on his death, and the house is exempt from IHT as it is covered by spousal exemption so no tax liability on this at all.

lincroft1710

Sorry for your loss.


Is your intention to move into the new house when renovated, then sell late mother's house? If so I don't think you would be charged CGT on your late husband's house. As it is empty it may well attract double Council Tax.


I am not well versed on possible CGT where a beneficiary lives in an inherited house (your mother's) and later sells it, or if it is  likely your brother would get a CGT bill. 

marymck

I seem to have lost the reply I just typed in. So my apologies if this appears twice.

Thank you Lincroft and Keep pedalling for your replies.

I'm hugely relieved and grateful Keep Pedalling for your assurance that I won't have to pay CGT or Inheritance Tax on the house my husband bought for us. I really wouldn't have had the money.

Thank you Lincroft for the heads up about the Council Tax. I hadn't thought of that. I think I can afford to pay it, at least in the short term.
I don't know where I'll live once the renovations on the new house are finished. I'm going to have to put some of them on hold anyway until I can access my husband's bank account.
I think I will probably have to sell up as the new house will be too big and difficult for me to manage alone.

The news about the Chancellor potentially charging a tax for selling a house is a bit scary. We've only recently paid nearly £30k in stamp duty to buy the new house. So it would be a double whammy to have to pay again to downsize.

My mum's house we will have to sell at some point. But mum's house isn't worth a huge amount of money so I imagine any CGT due on that won't be huge either and hopefully I'll be able to pay my brother's share as he's let my husband and I live here with no pressure.

Keep_pedalling

CGT could apply eventually if the work carried out on the house increase the value significantly over the probate valuation and you then sell rather than make it your home. If the cost of these reservations is stretching you financially I would seriously consider selling it in its current condition.

marymck

Thanks Keep Pedalling. I thought I didn't have to get a valuation for probate on the new house as I understood it comes under the "excepted estate" criteria so that I don't have to submit a full inheritance breakdown to HMRC. Am I wrong? 

Or do I still have to get a valuation for the Probate application anyway?

I know I have to apply for probate, but I haven't had the go ahead from the medical examiner to apply for a death certificate yet so haven't yet started the process or looked at the probate form. My husband only died on Sunday, so I probably started thinking about these things too early but I needed to look into finances to see if I had enough money to pay the decorator. The bank won't let me take anything from my husband's account, without probate as his account is about £100 over the limit they'll allow people to access without full probate. So that alone became a worry which has snowballed.

Also, the trouble is, the house being part way through the renovations would make it very difficult to sell anyway. The decorator comes next week to do the hall, stairs and landing, which really does need doing as we had the stairs replaced. Plus I need to get some carpets. Most other things could be cancelled but the house would look a mess and I'd be letting tradespeople down.

Keep_pedalling

You do have to declare the value of his estate on the probate application although you do not have to break it down to individual assets like you do on an IHT return. As this is an exempt estate it is best to go with a higher than lower valuation as that can avoid or minimise a later CGT liability.

eskbanker

marymck said:

My husband only died on Sunday, so I probably started thinking about these things too early but I needed to look into finances to see if I had enough money to pay the decorator. The bank won't let me take anything from my husband's account, without probate as his account is about £100 over the limit they'll allow people to access without full probate. So that alone became a worry which has snowballed.

Are any family or close friends able to assist you in your time of need, either directly financially or just with hand-holding support?  It's a massively stressful time to be taking on lots of research, and if at all possible it would be handy to be able to prioritise the urgent matters rather than spinning too many plates at the same time....

Albermarle

Thank you Lincroft for the heads up about the Council Tax. I hadn't thought of that. I think I can afford to pay it, at least in the short term.
There is no national rule about how empty houses are treated for council tax. You will need to check with your own local authority.

The news about the Chancellor potentially charging a tax for selling a house is a bit scary. We've only recently paid nearly £30k in stamp duty to buy the new house. So it would be a double whammy to have to pay again to downsize.

It is just speculation at this stage, as are all the rumours floating around about what may or may not appear in the budget. In any case if it did happen it would almost certainly only affect houses with a high value- a figure of £1.5 Million has been mentioned but again just guesswork by the media.