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House sells for more than probate value

House sells for more than probate value

If a house is valued for probate at say 500,000 but sells for 550,000 is the extra 50,000 charged to CGT or IHT and at what rate. It was my Mums house she had other assets on death but about 100,000 of the house value (based on the 500,000 ) is likely to fall into IHT in the probate after using the 2 x 125,000 (hers and my fathers new property reliefs -Dad died 10 years ago but I believe his extra relief can still be claimed) and the remaining balance of her 325,000.

So its the extra over and above probate if achieved I’m wondering about. 

Is it possible if there was a general election and labour won and decided to remove the extra property relief for IHT that it could affect someone who has already died?

In general terms would it be correct to say a lower property valuation from an estate agent is better than a higher one?

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By SXGuy
23rd Sep 2018 18:03

The difference between probate valuation and sale of the house would be subject to CGT. The rate depends on the amount but some of it will be 18% and some 22%

Thats after your allowances though. It doesn't help to speculate what labour would or wouldn't do since they arnt the government so it's irrelevant.

I'd suggest seeking an accountant to accurately calculate CGT.

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24th Sep 2018 09:54

SXGUY
Finger trouble?? Don't you mean 28%

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By SXGuy
to bernard michael
24th Sep 2018 09:58

bernard michael wrote:

SXGUY
Finger trouble?? Don't you mean 28%

Well spotted! Thank you.

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By SXGuy
24th Sep 2018 10:03

I should really answer your second point though as it's merely speculation and not advice.

It's not always better for a valuation at probate to be lower.

In some cases if you can avoid IHT and still have a high valuation providing the house sells for no more than the difference between that and CGT allowance, you would avoid paying any.

In most cases though if the valuation is to low and the house sells for a great deal more, it will raise CGT.

there can be a fine line between paying IHT and/or CGT in certain situations, but an accountant would be best to advise you.

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24th Sep 2018 13:50

As an aside if the valuation for probate is too low, and the property sold for more then value you can change the value later on but its slightly messy.

The best thing to do is get a decent valuation and decent advice. O and the VO might not take Estate Agent's values as they are often "marketing" values not sales values.

Generally get some proper help, its horrible enough dealing with the loss of your loved ones without dealing with the complexities of winding up their affairs.

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24th Sep 2018 14:33

Why do you think it will sell for 10% more? I'm assuming you don't yet have probate and yes HMRC can query and adjust your figures if they are wrong. It goes worse for you if they are deliberately wrong.

(CGT rate is a straight 28% by the way. Young Estates get AEA; no Estate gets rate bands. Please don't rely too much on what you are told in this forum.)

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24th Sep 2018 17:40

If you inherit the house and it is transferred to you , and you make it your main home and then sell it within 18 months of the death , the CGT could be eliminated, as you will be deemed to have acquired it at the date aof your mother's death and at probate value. You will need professional advice to make sure all the steps are correctly carried out

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to Montrose
24th Sep 2018 21:52

On the other hand, taking professional advice of this kind would itself be indicative that dodgy planning was afoot - undermining the very case for PRR that the alleged "planning" was supposed to provide.

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to Tax Dragon
25th Sep 2018 15:45

HMRC have not in my past experience challenged this treatment, although that was occasions when a three year window was available under TCGA s223(1).

On one occasion CA's acting for the executors sought professional re-asssurance on this very point.

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