Capital gains tax on selling inherited property

Ed-1

The CGT rate for executors is 24% compared to 18% for basic-rate beneficiaries selling property.

If you are both executor and beneficiary of a property, do you have to formally transfer ownership of the property with the Land Registry into your name to pay your personal 18% CGT rate on selling the property, rather than the 24% the estate would pay selling it as executor, or because you are entitled to the property once probate has been granted, is it assumed for tax purposes that you already own it even if not updated officially at Land Registry before a sale?

Keep_pedalling

Have you undervalued the property for probate / iHT purposes or taken years to obtain probate? CGT should not be an issue otherwise.

To obtain the lower tax rate you would either have to transfer the property first which is likely to lead to delays in getting the place sold or you could make a Deed of Appropriation. This will state that on a specific date that the beneficial interest in the house has passed to the beneficiaries and that the executors will as acting as a bare trustee on behalf on the beneficiaries.

The latter involves legal costs so unless the gain is significant probably not worth doing. 

theartfullodger

My sister & I paid CGT on late brother's (died intestate) house value increase between when he died (deemed value) and sale price when sold in 2022.  Quite a bit.

Keep_pedalling

theartfullodger said:

My sister & I paid CGT on late brother's (died intestate) house value increase between when he died (deemed value) and sale price when sold in 2022.  Quite a bit.

How did you work out the deemed value? Where an estate is not near the IHT threshold I would value any house on the high side for probate purposes, to minimise the risk of a CGT liability. So for instance if I had 3EA valuations I would go with the highest not the average. 

GDB2222

Keep_pedalling said:

theartfullodger said:

My sister & I paid CGT on late brother's (died intestate) house value increase between when he died (deemed value) and sale price when sold in 2022.  Quite a bit.

How did you work out the deemed value? Where an estate is not near the IHT threshold I would value any house on the high side for probate purposes, to minimise the risk of a CGT liability. So for instance if I had 3EA valuations I would go with the highest not the average. 

Where there’s no IHT to pay, HMRC won’t necessarily accept that the value they have accepted for IHT will also apply for CGT. So, you could be challenged later, when you come to sell. 

I agree that going as high as reasonably possible is a good idea, but don’t throw away the record of valuations you have received, and be prepared to argue with the DV. 

theartfullodger

Keep_pedalling said:

theartfullodger said:

My sister & I paid CGT on late brother's (died intestate) house value increase between when he died (deemed value) and sale price when sold in 2022.  Quite a bit.

How did you work out the deemed value? Where an estate is not near the IHT threshold I would value any house on the high side for probate purposes, to minimise the risk of a CGT liability. So for instance if I had 3EA valuations I would go with the highest not the average. 

As part of process I & my sister had 3 local estate agents come round, have a look, offer a likely value (in writing), suggest any improvements:  (Interestingly for a house basically untouched since 1971 only suggestions were tidy it up and clean a bit: (I , me, installed a bog seat myself).

We via solicitor  simply averaged the valuations for "deemed value" (an expression |I invented btw..)   As it turned out it sold for a lot more, 6 bidders going through formal BAFO bids to estate agent., Sale went through, we were paid proceeds.  When I popped by about 2.5 years later (5 hours away) it had only declined further, no indication of any work done so F K what happened with the putchasers.  All very sad.  CGT/IHT paid, obvs.. He died intestate (had just cancelled previous will, didn't complete new will process.)