Pay tax on money from house sale ?

[vehelpfulguy]

My ex-wife died and left all her money, and her house, to our two sons (they are in their mid-20s).

They are due to sell the house soon and get about 100,000 pounds each.

Will they need to pay any tax on this money ?.

Does the tax situation differ depending if they put the money in property or not (if they put it towards buying a house for example).

[Oneeyedvic]

Inheritance tax is 0% up to around �250,000 (maybe slightly higher). If your ex-wife's estate is smaller than that there wil lbe no inheritance tax.

If it is any more than that, it will be taken out (by solicitor / executor) before it is given to your children.

[kags]

If the estate was worth in total less than �275,000 (current tax year), there will have been no Inheritance Tax to pay. Yours sons will be deemed to have acquired the house at its market value on the date their mother died. If the sale proceeds are more than this value, the difference is a capital gain, which will be spit between them and could be liable to tax. Each person has an annual Capital Gains Tax exemption of �8500, and only the excess over this (provided it hasn't been used elsewhere) will be taxable. There may be other reliefs depending on the circumstances. Even if there is no tax to pay your sons will still need to notify the Inland Revenue of the disposal.

The tax treatment of the gain will be the same no matter how they reinvest the proceeds. If they are investing in property, there are changes in April that may allow investment via a pension, but specialist advice should be sought on this.