Capital Gains Tax - split sale of inherited asset

Property has increased in valus since probate and proceeds are split between 4 siblings - using CGT

Didn't find your answer?

 Grateful for any help - I have used the gov.uk CGT guide. A summary of the situation is as follows. Late mother's will leaves house to 4 siblings, property valued at probate (greater value than the red book valuation used to reflect realistic price)however the sales value looks likely to exceed this by £140,000. The probate value was under the IHT threshold as there was rollover relief from the late father's estate. Reading CGT notes each beneficiary can use their CGT allowance and pay Capital Gains on the balance of the gain. The solicitor advises that the Bare Trustee can sell the property on behalf of the beneficiaries to use their CGTAs however she is concerned HMRC may not accept this and push for IHT on the increase to be paid??? There would be some CGT payable by each sibling. Any experience of similar cases? I have used HMRC IHT and CGT guides which I found very helpful. Thank you in advance

 

 

Replies (9)

Please login or register to join the discussion.

By johngroganjga
08th Jul 2018 23:05

Not sure what your question is. Yes the beneficiaries pay CGT on the their share of the difference between sale proceeds and probate value less their CGT annual exemptions, if available.

If the probate value has not been agreed, yes the subsequent sale price may be a relevant factor in reaching agreement.

Thanks (1)
avatar
By Tax Dragon
09th Jul 2018 06:51

BUT if the house is sold before it is distributed to the beneficiaries and is a disposal by the estate, the gain is taxable on the estate.

Are there estate accounts that show what's happened?

Thanks (0)
Replying to Tax Dragon:
avatar
By carolmd
09th Jul 2018 07:55

Thank you - the estate cannot be distributed until the property has been sold agreed collectively by the four beneficiaries ? I will find out if there are Estate Accounts? I would expect these to be prepared after the sale (?) thank you for responding

Thanks (0)
Replying to carolmd:
avatar
By Tax Dragon
10th Jul 2018 07:20

What you are saying is confused - therefore confusing. Talk of a bare trustee makes it sound as if the property has been distributed from the estate. The bare trustee would have to act as instructed by the four owners. But in that case the sale would not be relevant to the estate and estate accounts would not need to wait until the property had been sold.

You refer to a solicitor. My best guess is that you have not understood what s/he has told you. (Hence the confused nature of what you are saying.) Have another chat with the solicitor and see whether that helps.

Additional IHT will not be due unless the value used at date of death was too low - and even then only if it has not been formally agreed (cf John's comment above). Is that what the solicitor was suggesting?

Thanks (0)
Replying to Tax Dragon:
avatar
By carolmd
10th Jul 2018 18:14

Thank you all for responding - I am unclear as to why there is only one CGT allowance when the value of the estate including the property sale is being shared equally between 4 siblings who each have a CGT allowance to offset the increase in value of the property since probate. The house is in a fairly derelict state therefore it was difficult to value - in this case someone has fallen in love with it and paid a very good price hence the gain between probate and sale value. I am meeting the solicitor this week.

Thanks (0)
Replying to carolmd:
avatar
By Jzm63
06th May 2021 09:47

Hi, sorry to jump onto an 9ld thread but I have a very similar situation to the one you described. May I ask how you ended up proceeding? Thank you!

Thanks (0)
Replying to carolmd:
avatar
By Jzm63
06th May 2021 09:47

Hi, sorry to jump onto an 9ld thread but I have a very similar situation to the one you described. May I ask how you ended up proceeding? Thank you!

Thanks (0)
Replying to Jzm63:
Stepurhan
By stepurhan
06th May 2021 10:25

This thread is from 2018. Tax rules change.

Unless it is very recent, you should always start your own thread detailing your own situation.

Thanks (0)