Questions after receiving probate - Can you help?

RAS

Suggest builder brother gets quotes from EAs for value of the property after work is done, to satisfy themself that they can make a profit.

And remind them that CGT will be payable on the increase in value less some costs. They need to check what the allowable costs are before they start.

It may not be worth the hassle.

silvercar

I’d make things legal and tidy, to avoid future arguments. Put the property in the name of builder brother with 2 charges on the property of £15k each for you and the other brother. Stipulate that no interest is payable in the first year, then starts to accrue (paid from the sale) at BoE rate.

That way it is all clear from the outset, who gets what. That assumes that you and other brother are happy to wait until the property is sold to get your money, with the incentive in interest payment for builder brother to get on with the job. It also means you and other brother accepting that any increase in property value just because of house price inflation will go to builder brother. It also means that a drop in house prices means builder brother may lose out if he takes too long.

Noahnewby

RAS said:

Suggest builder brother gets quotes from EAs for value of the property after work is done, to satisfy themself that they can make a profit.

And remind them that CGT will be payable on the increase in value less some costs. They need to check what the allowable costs are before they start.

It may not be worth the hassle.

Any idea where you would get information regarding allowable costs for CGT? I've never had any dealings with CGT and wouldn't know where to start.

RAS

There's government guidance. 

Noahnewby

silvercar said:

I’d make things legal and tidy, to avoid future arguments. Put the property in the name of builder brother with 2 charges on the property of £15k each for you and the other brother. Stipulate that no interest is payable in the first year, then starts to accrue (paid from the sale) at BoE rate.

That way it is all clear from the outset, who gets what. That assumes that you and other brother are happy to wait until the property is sold to get your money, with the incentive in interest payment for builder brother to get on with the job. It also means you and other brother accepting that any increase in property value just because of house price inflation will go to builder brother. It also means that a drop in house prices means builder brother may lose out if he takes too long.

I appreciate what you're saying but neither myself nor my other brother are desperate for the money. Personally, I couldn't care less whether I receive something or not. I just want the property sold and then it's another thing less to worry about.

silvercar

Noahnewby said:

RAS said:

Suggest builder brother gets quotes from EAs for value of the property after work is done, to satisfy themself that they can make a profit.

And remind them that CGT will be payable on the increase in value less some costs. They need to check what the allowable costs are before they start.

It may not be worth the hassle.

Any idea where you would get information regarding allowable costs for CGT? I've never had any dealings with CGT and wouldn't know where to start.

Very general guidance is that anything that is an improvement is subject to CGT, anything that is maintenance or repair is not. So building an extension would be an improvement. Repairing/ replacing old windows, a new boiler decorating would not qualify.

The rules are the costs of the improvement are allowable expenses (against the CGT), repairs would not be. That is why it sometimes makes more sense to sell a property without doing anything to it. 

Noahnewby

RAS said:

There's government guidance. 

Thanks for your prompt reply, much appreciated.

Noahnewby

silvercar said:

Noahnewby said:

RAS said:

Suggest builder brother gets quotes from EAs for value of the property after work is done, to satisfy themself that they can make a profit.

And remind them that CGT will be payable on the increase in value less some costs. They need to check what the allowable costs are before they start.

It may not be worth the hassle.

Any idea where you would get information regarding allowable costs for CGT? I've never had any dealings with CGT and wouldn't know where to start.

Very general guidance is that anything that is an improvement is subject to CGT, anything that is maintenance or repair is not. So building an extension would be an improvement. Repairing/ replacing old windows, a new boiler decorating would not qualify.

The rules are the costs of the improvement are allowable expenses (against the CGT), repairs would not be. That is why it sometimes makes more sense to sell a property without doing anything to it. 

That's very helpful , thank you.

Savvy_Sue

Noahnewby said:

silvercar said:

I’d make things legal and tidy, to avoid future arguments. Put the property in the name of builder brother with 2 charges on the property of £15k each for you and the other brother. Stipulate that no interest is payable in the first year, then starts to accrue (paid from the sale) at BoE rate.

That way it is all clear from the outset, who gets what. That assumes that you and other brother are happy to wait until the property is sold to get your money, with the incentive in interest payment for builder brother to get on with the job. It also means you and other brother accepting that any increase in property value just because of house price inflation will go to builder brother. It also means that a drop in house prices means builder brother may lose out if he takes too long.

I appreciate what you're saying but neither myself nor my other brother are desperate for the money. Personally, I couldn't care less whether I receive something or not. I just want the property sold and then it's another thing less to worry about.

we can all understand that you and the other brother may be feeling fairly relaxed about this ATM, but if you want the property sold so you no longer have to worry about it, the easy way is to sell on the open market 'as is'. All 3 of you get something. 

Of course, with your agreement, BB could buy from the estate 'as is', but silvercar's suggestion allows you to safeguard your respective shares, and while you may not care if you get something or not, and while the other brother may feel the same way, life has a bad habit of throwing curveballs. Will you feel the same way if something comes up where that £15k would be very useful, and you can't get your hands on it, and there's no sign of it ever materialising? 

mybestattempt

Noahnewby said:

silvercar said:

Noahnewby said:

RAS said:

Suggest builder brother gets quotes from EAs for value of the property after work is done, to satisfy themself that they can make a profit.

And remind them that CGT will be payable on the increase in value less some costs. They need to check what the allowable costs are before they start.

It may not be worth the hassle.

Any idea where you would get information regarding allowable costs for CGT? I've never had any dealings with CGT and wouldn't know where to start.

Very general guidance is that anything that is an improvement is subject to CGT, anything that is maintenance or repair is not. So building an extension would be an improvement. Repairing/ replacing old windows, a new boiler decorating would not qualify.

The rules are the costs of the improvement are allowable expenses (against the CGT), repairs would not be. That is why it sometimes makes more sense to sell a property without doing anything to it. 

That's very helpful , thank you.

Given the clear profit motive in developing/improving then immediately selling the property then HMRC may well take the view that this is a trading venture (subject to income tax) rather than a capital gain.