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Probate value / IHT / CGT

Can we change property value before probate is granted?

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Hi 

Trying to navigate our way through options.

My late father's estate is the beneficiary of the funds realised from sale of my late grandmother's house. Ownership of property is with a trustee organisation, as executor of my grandmother's estate. Its located abroad.

Property valued at dad's date of death was equivalent to £432K based on a private sale offer from neighbours. They had actually originally offered around 30K more but couldn't get finances sorted at that price point. We also had property professionally valued which yielded a marginally smaller value. 

Grant of probate application submitted but still in process.

Meanwhile, in the 5 months since submitting, we have sold property by auction to a very keen buyer, for around £250k more than our original private sale offer, ie the amount we submitted for probate. The huge price increase is not just down to market conditions, its very definitely a question of motivation.

My first question is: can we make a case for changing the value that we submitted for probate given the amount hasn't yet been agreed and also because the new value takes us above my parents combined nil rate IHT threshold?

If not, what options might we have to reduce our CTG liability?

My mum 3 siblings and I are all beneficiaries and executors of Dad's will. There is no tax due in the country where the property is located. We haven't improved in it at all over the years and it's not been lived in since my grandparents passed a good few years ago. The time that's passed from losing dad to selling foreign property is 13 months.

Thank you for you help! Sorry if this sounds confused. It's because I am confused! 

Replies (12)

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By Tax Dragon
06th May 2021 10:36

I contributed to a thread a year or two back where the situation wasn't quite as (possibly) complex as yours but had a similar large gain apparently post death.

IIRC the querist on the other thread went away and took professional advice. Maybe that's what you should consider doing.

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Replying to Tax Dragon:
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By Jzm63
06th May 2021 21:27

Thank you! Yes I did see that thread I think... we've had legal advice the whole way through but I just feel we are missing a trick and wanting to get a sense from wider community to guide my challenge

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By BudgetB
06th May 2021 11:39

I would agree with the response from Tax Dragon, I think you need a meeting with an accountant rather than the help of a forum for that one.

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By Duggimon
06th May 2021 14:06

It's tricky because while the probate value may be revised upwards from the initial application, the sale at £680K does not mean the value is £680K, as you say, there was more than market conditions at play.

I can really only echo the comments so far that given the amounts at stake, professional advice will be well worth whatever it costs.

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Replying to Duggimon:
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By Jzm63
06th May 2021 21:28

Thank you! Legal or financial???

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By More unearned luck
06th May 2021 19:56

See col, F Q12, form IHT405 and IHTM23185. HMRC say completion should be within two months of the filing of the IHT400/IHT205, so timing is against you. Moral: don't be in a hurry to file the IHT400 or IHT205, at least, if no IHT is due. Perhaps the delay in selling was caused by coronavirus or lockdowns and thus more time allowed?

Failing that, an assent before the hammer fell would have have multiplied the annual exempt amount by five (if you and your family had no other use of your AEAs) and might have led to some of the remaining gain being taxed at only 18%. Would an assent now have the same effect? I doubt it. Moral: consider who should make any capital gain (the estate or the legatees) before the asset is sold.

These are matters on which to take professional advice, but really advice should have been sought earlier..

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Replying to More unearned luck:
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By More unearned luck
06th May 2021 20:14

A further possibility, if HMRC are unwilling to extend their "two months maximum", is to argue that the administration period ended on a date that fell before the hammer did. That would, if successful, have the same effect as a timely assent.

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Replying to More unearned luck:
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By Jzm63
06th May 2021 21:01

Thanks for thoughts on all this.

So administration period ending... being the point at which we submitted inheritance paperwork?

Our probate solicitor has been kept in loop with plans at each decision point but didn't impart advice on timing nuances, and we weren't aware of the need to ask.....

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Replying to More unearned luck:
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By Jzm63
06th May 2021 21:10

Thanks
Do you suggest ifa or solicitor.

I believe the relevant form is iht417 - foreign assets?

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By Montrose
06th May 2021 20:09

Where was grandmother domiciled at date of her death?
Did Dad have an direct interest in property overseas[even if legally in name of trustee,] or was property held under a trust established by Grand mother. If so did Dad have an interest in possession
Date of grandmother's death [before or after 22nd March 2006] would be relevant to establish if such an IIP had been created. Terms of trust would then have to be established to see if it was an IPDI

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Replying to Montrose:
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By Jzm63
06th May 2021 21:31

Thank you! Gosh not sure where to turn for answers to these questions, but very helpful to have to hand thank you will get looking!

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Replying to Jzm63:
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By Tax Dragon
07th May 2021 16:30

Jzm63 wrote:

Thank you! Gosh not sure where to turn for answers to these questions...

Try a TEP.

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