Is CGT payable on property disposal upon death

Is CGT payable on property disposal upon death

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The question arises in relation to IHT planning. If the client sells it whilst still alive, pays the CGT, eventually, upon death, the remainder of the proceeds from sale would attarct IHT as well! So, if he does not sell whilst still alive, upon death, is CGT payable, and then IHT on the remainder of the proceeds?
John Gordon

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By AnonymousUser
11th Jul 2006 09:12

No CGT on death
Not sure that I understand the question, but if I do - there is no CGT on death - the heirs inherit the assets at market value on death for CGT purposes. IHT is payable on value on death.

You're right on lifetime sale - if you sell during lifetime and hang onto proceeds, what you've got left after tax etc is chargeable to IHT (assuming it's cash held personally).

If you give away during lifetime - chargeable to CGT on gift (assuming no s165 relief available), but no IHT on death assuming you've not made a GROB/GWR.

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David Winch
By David Winch
11th Jul 2006 09:13

Death - the ultimate CGT avoidance plan!

John

One of my partners used to advise his clients to "make a will and die promptly".

There is no CGT chargeable on the difference between acquisition cost and probate value in relation to assets held at the date of death.

There may of course be CGT payable upon the difference between probate value and subsequent sales proceeds. Probate value ought to be open market value at the date of death. Sometimes executors attempt (misguidedly) to under-value assets held at death (even when those assets would attract no inheritance tax!).

It may be sensible for a businessman to remain owner of his business until death in order to minimise CGT and IHT.

I also remember acting for the daughter of a wealthy man who had taken advice to give away much of his portfolio of shares to his children. He suffered a large CGT liability as the shares had increased substantially in value. Over the next couple of years the shares (now held by his children) fell sharply in value - then he died, triggering the gifts to be fully taken into account for IHT purposes. Result - tax planning disaster!

David

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