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Probate date and selling the property

When does Capital Gains Tax arises

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I have a client whose dad died in 2014.  His dad left a will in UK and probate was completed in 2015.  The dad was born in India but lived in UK for 20 years.  I am not sure if domiciled in UK or India

While all the other assets have been distributed in UK, there is one Indian property that has caused some rumpus amongst my client siblings.  The property was supposed to beeen split equally but my client disagreed  and took legal action hence the delay in selling the property.  They have now agreed to sell the property in 2019.

Once the property is sold it maybe liable for capital gains tax but I assume the cost basis for the calculation will be the value at probate ?  Any increase in value will be liable for tax in UK and India.  The Indian Capital Gains tax can be offset agaist the UK tax under the DTA.  

 

  

 

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RLI
By lionofludesch
30th Sep 2019 13:07

Disappointed that "Probabe" seems to have been a typo, Jim.

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Replying to lionofludesch:
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By The Dullard
30th Sep 2019 13:18

Know many probabes?

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Replying to The Dullard:
RLI
By lionofludesch
30th Sep 2019 14:26

The Dullard wrote:

Know many probabes?

Not enough.

What about you ?

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By The Dullard
30th Sep 2019 15:15

I was always a collector of cards from telephone boxes.

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By JimLittle
30th Sep 2019 13:31

Sorry corrected

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By Jholm
30th Sep 2019 13:15

Yes

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By bernard michael
30th Sep 2019 14:02

In answer to the question in the header
CGT payable on the date of sale

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Replying to bernard michael:
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By SXGuy
30th Sep 2019 17:07

Not really the full answer though is it.

CGT payable on date of sale if value has risen since the value established at probate.

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By unearned luck
30th Sep 2019 23:44

A few points to ponder:

Who won the legal action? Who are the 'they' that have agreed to sell?
Do you need to establish your client's domicile?
Who is selling (PRs or legatee(s))? If PRs consider an assent. When did/does the admin period end?
What sort of property? If business is ER due?, if residential, is PPRR due?
If your client lost the action, how many of the siblings are UK resident and domiciled?
What event gives the date of sale?
How does India compute capital gains? (I think that there may be no rebasing on death). How does that affect the amount of DTR relief due?
Exchange rates: what dates do you use to convert the PV, proceeds and Indian tax into Sterling?
Is client married? Should he gift an interest to his wife before the date of sale?
What legal and other professional costs can be claimed as an expense?
Has the PV been 'ascertained'?
How much tax is at stake? Is it worth engaging expert advice?

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Replying to unearned luck:
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By JimLittle
01st Oct 2019 13:42

Thanks for the questions

No one won in the end they just accepted the property will be split five ways (between the deceased children).

Domicile is irrelevant in CGT

The property will be passed on to the kids equally from the estate

Its residential - No PPRR

India compute tax on indexation

Spot rate will be used

All the kids are married and yes we have though of passing to spouses if any capital gain generated.

Legal expenses were in correction with legal case and inheritance so cannot be offset

Thinking about it - I don't think there is any tax as house prices have fallen in India since 2016. Could end up being a loss.

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By unearned luck
02nd Oct 2019 02:24

"No one won in the end they just accepted the property will be split five ways (between the deceased children). ". I can see that the family is worse of by the cost of the litigation (though not as badly as in Jarndyce v Jarndyce), but if your client sued for more than 1/5th but ended up with 1/5th I would say he lost and his siblings won.

"Domicile is irrelevant in CGT" Is it, now?

"The property will be passed on to the kids equally from the estate". It's important to get this right if you want one AEA per sibling (& another for each spouse) v none.

"India compute tax on indexation" That doesn't answer the question, but indicates that DTR will be restricted.

"Legal expenses were in correction with legal case and inheritance so cannot be offset". You should explore the possibility of the litigation costs being expenditure on 'establishing, preserving or defending title to or rights over the asset'. (The other four might find this easier, than your client would.)

"Thinking about it - I don't think there is any tax as house prices have fallen in India since 2016. Could end up being a loss". This misses the point of my question about exchange rates.

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