House valuation

[lafrancaise]

A close member of the family died this summer, for probate the house was valued at a said sum which was put on the probate form. The house seems to be interesting quite a few people and seems likely to go way over the probate quote. Probate states the executors must declare the sale price before 6 months of the death but what happens if the house isn't sold in the 6 months? There's nothing to prove it'll be sold at this new price.
I'll really appreciate anybody who's been in this situation or is in the law field. Thank you

[dzug]

I <think> that the estate will be liable for capital gains tax on the difference between the probate value and the sale price, less an allowance and expenses.

I'd ask the Probate Office about what to do about declaring the sale price at the end of 6 months - it can't be an unusual situation

[Barmaid]

In terms on CGT allowances, I believe the executors have the allowance for year of death and the following year that can be taken into account to save CGT. However, if the gain exceeds this, it may be possible for the executors to appropriate (ie transfer on paper only) the property equally between the residuary beneficiaries (if it is not needed to pay liabilities/tax) and sell it on their behalf as bare trustee - if there are a lot of them, it may be that the gain on the sale of the property, when split between all the beneficiaries will not exceed their personal allowances and thus there will be no CGT. (Eg say there are 7 residuary beneficiaries, the executors appropriate the property at probate value equally between the 7 and then sell it on their behalf. The gain is then personally in the hands of the beneficiaries rather than the estate). An alternative is to substitute the sale price for the probate value, which means that more IHT will be payable (depending on the value of the estate) but no CGT will be payable. At least this is how it used to work when I used to do this sort of thing. Probably best to take advice from a trust and estate specialist. Advice may only cost you a few hundred quid and could save a potential gain of thousands.

[Peter Pedant]

Oh God of course there are rules - but I cant quite remember what they are. Occurs commonly

I thought the IHT was recalculated , and the executors paid that .

You know but if it is years later, and the beneficiaries have been sort livng in it etc then CGT may be payable

be sure that 1) the tax man will get his bit
2) there are rules against double taxation -paying IHT and CGT for the same gain.

[lafrancaise]

Thanks for your anwers. Looks as if I'll have to contact the Inland Revenue and ask them.