CGT worries

Sooz1966

Hi...me again.

I've completed the IHT400 forms and waiting for my code for Probate. The estate is well under the iht threshold with various allowances.

I used a zoopla estimate for the house, the highest of the 3 it gave me. I now know this isn't a good idea but my dad's house is over 3 hours away, I work and what with everything going on, including using my Sundays to go up there to start clearing the house, I just couldn't see how I could organise 3 valuations during the working week on top of everything else. Anyway, I'm now worrying the valuation was probably too high by maybe as much as £50k but won't know for certain till I try to sell when I get probate.

I didn't think it would matter as there was a lot of wiggle room before iht would be payable, hence erring on the side of caution by using the highest estimate but I'm now realising that a high valuation impacts CGT liabilities. If I'm understanding correctly, you only pay CGT if you sell for higher than the value at death - so, by putting in a higher value, I've effectively reduced the liklihood of paying CGT. I'm assuming this is fraudulent or something?

Any advice about how I should sort this out now? I'm losing sleep worrying about this and everything to do with being executor for my dad. I've researched online but only finding examples where houses have sold for more than the value at death, while I've inadvertently created a situation where it will probably go for less because I've overestimated the value.

For info, dad died on 2nd January and I'm the sole beneficiary. The house valuation put on the iht form was £300,000. An acquaintance of my dad has been in touch and is interested in buying the house for around £250,000. It isnt on the market yet but I'd be happy to accept the offer to just get everything sorted. I absolutely don't object to paying any taxes due but not sure how to rewind things and make the house valuation right.

Keep_pedalling

Relax you have done nothing fraudulent and HRRC art not going to challenge your original valuation.

Sooz1966

Thank you @Keep_pedalling

The whole thing is just so stressful, I only read about CGT today, and it dawned on me that by trying to do right by IHT, I've created a contrary problem with CGT.

I'm wondering if it'd be best to take time off work and get the valuations now so I've got something ready, from relatively soon after his death, if needed. I understand I have to complete a form when I sell and, presumably, evidence of the house value at death will be needed then. I'm assuming proof is required as how else do they know you owe CGT or not.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81905318#Comment_81905318

You don’t need to do that and HMRC are only interested in amended values if they it effects IHT. Save your leave and treat yourself to a really nice holiday once you have the estate wrapped up.

gplion55

You have stated a "Probate Value" of £300,000. Capital Gains will only come into play if you sell it for more than that amount. There is no need to panic. Regarding Inheritance tax you will need to examine what you need to pay based on how the will was set up (and whether he had a wife/partner) as that can boost your entitlements quite a lot before IHT kicks in (up to £1,000,000).

Get all the paperwork out of the way first. Then worry about the clearance which is an emotional and quite often energy sapping job in itself.

Get some helping hands too as 6 hours driving is not nothing. You need time to yourself as well so I would only plan in a maximum of 2 x per month. (I have a similar situation but I live 12 hours away). Make a plan of what you want to tackle each time, maybe by room (or shed/garden) and you will be surprised how much better it goes with a little planning. Spend one day working out your plan on site, then you know the scale of your task.

When the time comes, hire a skip if necessary.

Please note that you can claim your travel expenses against the estate too, so save your fuel receipts.

Regarding the 'acquaintance' I would not even discuss that with them right now. Let them know that they can make an offer when the house is officially up for sale based on an agent's valuation. You will avoid any unforeseen legal pitfalls that way.

Good Luck.

Savvy_Sue

I agree that planning and getting help is a good idea. I know the visits I made to mum's house with a friend to extract some of her vast wool stash were much easier than those I had to make alone. It was so easy to get distracted and overwhelmed.

If you have no-one to come with you, another possibility might be to work with a professional declutterer, and I cannot recommend house clearance highly enough, once you know what you don't want! "Could we not take all this to the tip?" asked my co-executor. We'd spent one day with young adults loading an estate car, but barely scratched the surface. NO!

Sooz1966

Thank you for your kind words @gplion55 and @Savvy_Sue

I think I'm ok on the iht, all forms were completed and I'm waiting for code to apply for probate, i estimate another week to go. According to my calculations, no IHT to pay having applied all mum's allowances - she died several years ago, leaving her bit just to dad. Dad just had very straightforward (but relatively large) bank accounts and the house, and had neglible personal possessions, didn't make gifts nor had other complications so fingers crossed it's all correct and I'll hear something by day 20!

Yes, the house clearance is a major headache. I keep telling myself there's no hurry but emotionally, after several months of travelling back and forth to his home when he was ill, i just want it all over. It's quite overwhelming on top of grieving and the rest of life. And Sunday isn't a good day to get official stuff done, like returning medical equipment and medicines, or taking stuff to charity shops - I'm drowning in bin bags and bringing tons of stuff home with me every visit so I can get rid of it during my lunchbreak at work!

I think you're right about the prospective buyer, I'll tell him I'm going to get it valued first and then we'll talk. The whole issue of CGT is still a bit of a puzzle to me so I'm just going to park it for now. Having never had any money to speak off, to find myself dealing with such unfamiliar taxes is quite surreal!

BooJewels

To reiterate what others have said - please just forget about CGT for the moment - it will only come into play if you sell the house for more than the value you put on the IHT/Probate papers. If you went too high on that number in the first instance, it is therefore unlikely to even be a consideration. If, by some chance, it is, then it's easily enough sorted - a simple form to fill in - you can do it on-line. You already have an allowance for CGT of £3,000 - so the house would have to sell for more than your Probate value plus £3k, for anything to be payable. So don't give it another thought - you've enough on your plate for now. Cross that bridge if you ever even come to it.

I had to pay it on my father's estate because Covid hit and when we emerged and I was able to clear the house and sell it, house prices went bonkers and we sold it for a chunk more than we expected. But I was happy enough to pay it because of the additional funds the house generated - and our allowance was greater then too, so it wasn't a huge amount in the end.

I would also reiterate what @Savvy_Sue said - please do consider using professional house clearers once you're happy that you've been through everything that you want to. It was hard enough doing my parents' very cluttered and mouse-infested house with my sister - but if you're working full time and travelling, it's even more of an onerous task. Might it to more efficient to take time off and go and stay for a few days and bottom it out, rather than travelling regularly just to do a bit. My sister lived locally, but I didn't, so we'd do it in 1 week chunks - I'd go and stay and she'd either take time off to join me each day or just come after work and save up any time she had owing to finish a bit earlier. We found it much easier to get into that way and achieved more, rather than short stints at weekends.

We did do the tip runs, then skips, then had really had enough so got the clearance people in - and wished we'd done that a lot sooner. Would have saved a lot of broken nails, bruised knuckles, grazed knees and torn muscles!

Savvy_Sue

I think it's easy to underestimate how exhausting grief is, perhaps especially after a long illness.

Another suggestion: could you negotiate a 4 day week at work for a short period? (Of course you may like it so much you never go back to 5 ...)

MayDogsandCoffee

Rather than taking to charity shops many will arrange to collect, esp if there is some furniture - some even do the house clearance. I echo the other posters, with regards to the offer, I would put it in the hands of an estate agent (they can do all viewing too - you don't ever need to meet buyers) who can take the emotion out of what is a very harrowing time. Did you take enough Bereavement leave? Dr's will give sick notes for this. With the medical equipment get a bit hard nosed and tell them that it needs to be removed by X date or it will be left on the front garden and you will not accept responsibility for what happens to it. It is a very hard time so make sure you take care of yourself, have a list and tick off one thing at a time.

otb666

We had the British heart people do the house clearance Had to wait a month for a date they could do. They got rid of 3 lorry loads for £1500. The relief you feel when its all gone will be good. Just think they have had their moneys worth out of their stuff and nobody will want it and saves you sorting it all out which never got sorted after several decades and should not fall on your shoulders as they could not be bothered to sort their stuff. Thats the way I looked at it Hope this helps. Do go through drawers etc though as we found money kept in suit pockets.