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Changing names on house deeds after Probate.
We went to Probate yesterday regarding our father's house. We now have to have the deeds changed into our names and were told that we need to do it soon as we will not sell the house until next year due to something in the will and the IR will think we are trying to dodge Capital Gains tax if we leave it too long.
I am sure an Aber has done this before and can advise.
Many thanks!
I am sure an Aber has done this before and can advise.
Many thanks!
Answers
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What is happening to the house under the terms of the Will? - is it left to you or are you selling it as Executors of your late father's estate to release the money into the estate?
If it is being left to you and you intend to keep it longer-term, you need to complete probate first using a suitable valuation for the property on the probate financial forms. Then HMRC will calculate whether any Inheritance Tax is due on the total value of the estate, which must be paid out of the estate before you can get authority as Executors to sell the assets. At that point you can transfer the property from your late father to you at the LR. Unless you live in it, capital gains tax MAY eventually be liable on the property based on any gain in the value between when you finally sell and the transferred value to you.
If you are not keeping the property, but selling it on behalf of the estate, there is no reason to transfer it into your own name - you can sell it (once probate is granted) on behalf of the estate.
If it is being left to you and you intend to keep it longer-term, you need to complete probate first using a suitable valuation for the property on the probate financial forms. Then HMRC will calculate whether any Inheritance Tax is due on the total value of the estate, which must be paid out of the estate before you can get authority as Executors to sell the assets. At that point you can transfer the property from your late father to you at the LR. Unless you live in it, capital gains tax MAY eventually be liable on the property based on any gain in the value between when you finally sell and the transferred value to you.
If you are not keeping the property, but selling it on behalf of the estate, there is no reason to transfer it into your own name - you can sell it (once probate is granted) on behalf of the estate.
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always make sure that you go to the land registry website through the .gov lin as there are loads of others that look the same but are actually private companies who will charge you to do what you can do for yourself.
always make sure that you go to the land registry website through the .gov lin as there are loads of others that look the same but are actually private companies who will charge you to do what you can do for yourself.
I should perhaps add that if you sell it as the executor of the estate and there happens to be an uplift in the value between what you sell at next year and the value used for probate purposes, a Capital Gains Tax liability on the estate MAY arise if the uplift is big enough. The estate gets a CGT allowance of about £10k in the year in which you sell - and with property prices fairly flat at present - this may be unlikely. But that is the CGT risk that you have probably been told about.
We are selling my mothers & fathers old house at the moment (me and my 3 brothers and sisters).
The house was valued by the estate agent at a certain amount, but due to a bidding war between some buyers it sold for £100,000 over the estate agents valuation.
Some of that will go in Inheritance tax, but we could each also be liable for CGT on the "profit".
So we have now transfered the house from my parents name to us 4 childrens names so we can get up to £10,000 each before paying CGT.
The house was valued by the estate agent at a certain amount, but due to a bidding war between some buyers it sold for £100,000 over the estate agents valuation.
Some of that will go in Inheritance tax, but we could each also be liable for CGT on the "profit".
So we have now transfered the house from my parents name to us 4 childrens names so we can get up to £10,000 each before paying CGT.
The 'nil rate band' for Inheritance Tax (IHT) is £325k at present. This means that the first £325k of the net value of the estate has no IHT to pay. But it isn't just the value of the house you have to contend with - it is ALL of your late father's assets and chattels.
In addition, if your late father was left all of your mother's estate when she died, there may be an additional unused 'nil rate band' allowance that can be used to 'bump up' the effective nil rate band above £325k before any IHT is payable. This is too complex to explain in detail in a few sentences.
If you know that the net value of the estate is going to be well below the threshold for IHT in any event, it may be possible to 'enhance' the valuation of the house as presented on the IHT financial forms a bit - since it safeguards against the very issue that VHG is experiencing. Capital Gain Tax (CGT) on estates of the deceased is charged at 28% above the annual allowance, whilst IHT (above the nil rate band) is charged at 40%. It is therefore more advantageous to pay the CGT in preference to the IHT.
VHG's point is a good one, but an extreme example; a house at probate selling at £100k above initial valuation suggests a relatively highly valued house (an increase of 20% at bidding-war in a house worth £500k raises an additional £100k). This in turn suggests that VHG's late parent's estate may well have been subject to IHT in any event - in which case VHG has done his family a huge favour - as the family will be paying CGT at 28% compared to additional IHT which would have been chargeable at 40% (as well as the 4 lots of annual CGT allowance he also mentions).
I can't advise you about this, as you know. I just know the 'rules' and how to use them. However it may be worth spending a little money on tax advice if some of what I have said makes you wonder if you can minimise this tax.
In addition, if your late father was left all of your mother's estate when she died, there may be an additional unused 'nil rate band' allowance that can be used to 'bump up' the effective nil rate band above £325k before any IHT is payable. This is too complex to explain in detail in a few sentences.
If you know that the net value of the estate is going to be well below the threshold for IHT in any event, it may be possible to 'enhance' the valuation of the house as presented on the IHT financial forms a bit - since it safeguards against the very issue that VHG is experiencing. Capital Gain Tax (CGT) on estates of the deceased is charged at 28% above the annual allowance, whilst IHT (above the nil rate band) is charged at 40%. It is therefore more advantageous to pay the CGT in preference to the IHT.
VHG's point is a good one, but an extreme example; a house at probate selling at £100k above initial valuation suggests a relatively highly valued house (an increase of 20% at bidding-war in a house worth £500k raises an additional £100k). This in turn suggests that VHG's late parent's estate may well have been subject to IHT in any event - in which case VHG has done his family a huge favour - as the family will be paying CGT at 28% compared to additional IHT which would have been chargeable at 40% (as well as the 4 lots of annual CGT allowance he also mentions).
I can't advise you about this, as you know. I just know the 'rules' and how to use them. However it may be worth spending a little money on tax advice if some of what I have said makes you wonder if you can minimise this tax.
The house is a huge 5 bedroomed Edwardian house in a smart area of North West London. My father bought it in 1966 for just under £10,000.
The 3 estate agents valued it at between £600,000 and £650,000 but we sold it for £750,000. One person actually offered £800,000 but they wanted to turn it into a care home and we did not want to wait for planning permission etc.
My father died 10 years ago, my mother this year, and the estate is probably about £900,000. We can claim the full inheritance tax threshold of £650,000 and pay tax of 40% on any amount above that.
Considering my father left school at 14 he did quite well for himself, though i dont think he ever thought of himself as rich. The bulk of the extra money of the estate is shares he bought during the Thatcher years (BT, Rolls Royce etc).
The 3 estate agents valued it at between £600,000 and £650,000 but we sold it for £750,000. One person actually offered £800,000 but they wanted to turn it into a care home and we did not want to wait for planning permission etc.
My father died 10 years ago, my mother this year, and the estate is probably about £900,000. We can claim the full inheritance tax threshold of £650,000 and pay tax of 40% on any amount above that.
Considering my father left school at 14 he did quite well for himself, though i dont think he ever thought of himself as rich. The bulk of the extra money of the estate is shares he bought during the Thatcher years (BT, Rolls Royce etc).
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