Capital Gains personal representatives

Capital Gains personal representatives

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I am trying to complete a CGT calculation for personal representatives.  

Edith, an elderly client had dementia and resided in a nursing home. Her house was rented and the income helped pay the nursing home fees. Sadly Edith died July 2014. Probate value of house £260,000 provided by a chartered surveyor. Gross value of estate £350,000. Nil IHT payable by virtue of claim to transfer unused nil rate band. Probate granted December 2014.

Post death, the house continued to be rented until June 2015. House sold by personal representatives August 2015 for £295,000.

I have claimed estate agent fees and conveyance  legal fees in my CGT calculation.

I have discounted surveyors fees as these were not wholly and exclusive to the disposal-

I shall claim one annual exemption of £11,100 and tax the gain at 28%.

As per  Stonor v IRC(2001), it is not possible to substitute the sale value for probate value.

The following is where I need confirmation please.

In addition to estate agent and conveyance  fees I would like to claim for the costs of establishing title as per Statement of Practice 2(2004), and reduce the gain by a further £2,600 ( probate value £260,000 x 1% ).

Furthermore , an accountant charged £2500 for the IHT return and IHT calcs and a lawyer charged £950 for application for probate.

Please confirm that I am correct to discount the £2500 fees for IHT works and £950 probate legal fees from my CGT calculation?

And please confirm that I simply put through a deduction in my CGT calculation– costs of establishing title £2,600 ?

I shall naturally submit my calculation along with the Trust and Estate tax return for 15/16.

Thank you for reading the above and any help very much appreciated.

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By michaelblake
18th Feb 2016 17:10

Correct

You can claim £2,600 as a deduction following SP2/2004 but not the accountancy or legal fees as they are not an allowable cost of either acquisition or disposal under TCGA 1992 Section 38(1)(a) or (c). The SP2/2004 deduction is designed to meet the costs of establishing title under S38(1)b).

 

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