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Inheritance Tax
My Mother has just died and left her house to me and my brother. If we decide to sell it, will we have to pay any tax? Ie capital gains or inheritance?
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For more on marking an answer as the "Best Answer", please visit our FAQ.No capital gains on it for the estate itself, only inheritance tax. The value is decided by agreement with the revenue as at date of death. When the house is vested in you and you sell it at a profit on the date of death valuation, you then become liable for taxation on the capital gain on the sale.. You may opt to pay the inheritance tax on a house or land in 10 yearly instalments but that arrangement ends when the house or land is sold by you; then the balance of the unpaid IHT is payable forthwith
This is the form that you'll most probably need to complete
http:// www.hmr c.gov.u k/cto/f orms/ih t205-20 06-2.pd f
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Inheritance Tax threshold is £650,000 in total., so your personal threshold is £325,00. You need a professional valuation of the property. Also the taxman will take into account your share of any other assets you inherit - cash, bank accounts, car, etc. So your calculation is does your half of the property value plus any other share of assets keep you below the threshold or not.
Edmund, I don't quite understand your figure of £625,000.The threshold is normally £325,000 on an estate. It sounds as though you are saying that if someone leaves their estate to two people equally, rather than one person alone, the threshold is double what it would have been if they'd left the whole estate to one person
Sorry, perhaps I was typing before I was thinking!! You are right the threshold for IHT per person is currently £325,000. However if the professional valuation of the property plus the value of inherited assets exceeds a total £650,000 then sharing that valuation 50/50 could give rise to an IHT liability.
we're sorta edging there.
It depends whether any of your late fathers zero band was used and that depends on his will.
I cant remember how long an application for probate takes
They are certainly not on steroids....
The date of death is a big thing
My dear lady mother died 24 Jan 1994 and that for stock-pickers marked almost the stock market peak. And you will not be surprised that there are transitional rules for when the market falls between death and probate.
If you sell her stocks in ten years then you will have CGT to pay on the stocks with the base the day of her death
Dont forget there is four months of income tax for her estate to pay.
straightforward really
Buy a daily paper nearest her death for the stock market prices
It depends whether any of your late fathers zero band was used and that depends on his will.
I cant remember how long an application for probate takes
They are certainly not on steroids....
The date of death is a big thing
My dear lady mother died 24 Jan 1994 and that for stock-pickers marked almost the stock market peak. And you will not be surprised that there are transitional rules for when the market falls between death and probate.
If you sell her stocks in ten years then you will have CGT to pay on the stocks with the base the day of her death
Dont forget there is four months of income tax for her estate to pay.
straightforward really
Buy a daily paper nearest her death for the stock market prices
How long is a piece of red tape? How long it takes to get probate depends on a number of things: how much and what kinds of property, the deceased had (mostly delay through agreeing valuations and reliefs), how complicated the estate is (trusts involved etc) and, above all , the snail's pace at which the Office operates. You can generally agree a working liability and then pay that and leave the arguments about what else is or isn't payable to later; gifts in lifetime can involve a lot of discussion, as can strange things like whether a house is eligible for relief as the home of a deceased working farmer, but all for later.
I'd say it's 3 to 4 months in a fairly straightforward case, allowing for the snail. Of course, that may not be everything, but it gets probate. After that , to wind up the estate fully may take a month, or, in in the estate of my late mother (not that unusual, but full of tax arguments), 4 years !
I'd say it's 3 to 4 months in a fairly straightforward case, allowing for the snail. Of course, that may not be everything, but it gets probate. After that , to wind up the estate fully may take a month, or, in in the estate of my late mother (not that unusual, but full of tax arguments), 4 years !
A capital gains liability will exist to both you and your brother if the eventual sale price of the house (less dispersements, including estate agents) exceeds the valaution of the property when transferred to you (i.e. the probate valuation). Of course Busby and brother can each offset their personal annual CGT allowance, of around £10k each, but it is not true that there is only a IHT liability to the estate.
This has become relevant again now that house prices are moving back up.
The way to deal with this (if there is adequate headroom in the estate, without incurring an IHT liability) is to arrange an appropriately generous probate valuation.
This has become relevant again now that house prices are moving back up.
The way to deal with this (if there is adequate headroom in the estate, without incurring an IHT liability) is to arrange an appropriately generous probate valuation.