Capitol gains tax on inherited house
Discussion
My mother passed away in May 2022 and after the usual nightmare with IHT and getting probate we were finally allowed to sell the house last month. Good news is it sold for more than we declared at IHT so there is a liability in Capitol gains. I was shocked to discover that on selling a house you need to fill in a capitol gains form within 60 days of the sale, rather than deal with this as part of self assessment. Whilst my brother will need to pay his whatever, I want to offset against the sale of my business where I made a substantial capital gains loss. Anyone know if this can be done now with the form or do I have to pay now and claim back when I fill in my self assessment by January 2025!
Basically here .....
https://www.gov.uk/report-and-pay-your-capital-gai...
you need government gateway ID ,
scroll down to ....
If you don't have gateway or digital tax access....further down page is links how to do it by paper form
https://www.gov.uk/government/publications/report-...
https://www.gov.uk/report-and-pay-your-capital-gai...
you need government gateway ID ,
scroll down to ....
If you don't have gateway or digital tax access....further down page is links how to do it by paper form
https://www.gov.uk/government/publications/report-...
As long as you are UK resident, the 60 day reporting requirement is only to pay CGT. If you have no CGT to pay (loss brought forward from sale of business is more than the gain on the residential property) then you do not have to register or report anything. If the losses go some way towards reducing the CGT liability, they can be adjusted for when you fill in the CGT report.
If you don't need to report, then you may get a letter from HMRC nudging you to make a report. I would just get your tax return done as soon as you can.
If you don't need to report, then you may get a letter from HMRC nudging you to make a report. I would just get your tax return done as soon as you can.
We are in a similar position - If it's not actually sold you may be able to mitigate CGT by "appropriation".
https://www.wansbroughs.com/news-events/when-is-a-...
https://www.wansbroughs.com/news-events/when-is-a-...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Can you even do this? It's the Estate that's liable for the CGT, not the benficiaries in the will, who get the net cash following.
Can you even do this? It's the Estate that's liable for the CGT, not the benficiaries in the will, who get the net cash following.
rattyuk2000 said:
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Can you even do this? It's the Estate that's liable for the CGT, not the benficiaries in the will, who get the net cash following.
No , the estate is assessed at time of death and there are no CGT liabilities on assets purchased by the deceased. However whilst the heirs immediately inherit you can't sell the assets until Probate. With most assets the value of these goes up and down so when you do get permission to sell them the heir is liable for any gains or losses .Can you even do this? It's the Estate that's liable for the CGT, not the benficiaries in the will, who get the net cash following.
On a related issue, how long will HMRC wait for the heirs to sell a property to pay IHT? In a situation like today where idiot estate agents have overvalued the property and it has just sat there for a year, all the while house prices are still dropping further and the heirs are in a state of denial about this. Is there some maximum time allowed for disposal before HMRC put the pressure on to force a sale at a more realistic price?
P700DEE said:
No , the estate is assessed at time of death and there are no CGT liabilities on assets purchased by the deceased. However whilst the heirs immediately inherit you can't sell the assets until Probate. With most assets the value of these goes up and down so when you do get permission to sell them the heir is liable for any gains or losses .
Doesn't that depend on the exact timing of the sale? As in if its sold after getting probate, but before distribution (and thus transfer of the property title at HMLR) to beneficiaries, then any growth in value between the valuation at the date of death and the sale would fall on the estate. Any sale after distribution to beneficiaries (and associated HMLR transfer) would however fall on the specific beneficiary then owning the property.
AdamV12V said:
Doesn't that depend on the exact timing of the sale? As in if its sold after getting probate, but before distribution (and thus transfer of the property title at HMLR) to beneficiaries, then any growth in value between the valuation at the date of death and the sale would fall on the estate.
Any sale after distribution to beneficiaries (and associated HMLR transfer) would however fall on the specific beneficiary then owning the property.
A quick Google search says that as benficiaries from the will we inherited all the assets on the date of death and the estate is evaluated for IHT as at that date. Whilst it is true both losses and gains are valid regarding Capital gains this shouyld be shared between all the beneficiaries?Any sale after distribution to beneficiaries (and associated HMLR transfer) would however fall on the specific beneficiary then owning the property.
WayOutWest said:
On a related issue, how long will HMRC wait for the heirs to sell a property to pay IHT? In a situation like today where idiot estate agents have overvalued the property and it has just sat there for a year, all the while house prices are still dropping further and the heirs are in a state of denial about this. Is there some maximum time allowed for disposal before HMRC put the pressure on to force a sale at a more realistic price?
The HMRC don't wait! You get six months to pay any IHT due after which they charge interest! Remind the executors of this and that if the house sells for less than they declared you can get the IHT reassessed or clain a loss against the house of offset against any gain in other assets.P700DEE said:
WayOutWest said:
On a related issue, how long will HMRC wait for the heirs to sell a property to pay IHT? In a situation like today where idiot estate agents have overvalued the property and it has just sat there for a year, all the while house prices are still dropping further and the heirs are in a state of denial about this. Is there some maximum time allowed for disposal before HMRC put the pressure on to force a sale at a more realistic price?
The HMRC don't wait! You get six months to pay any IHT due after which they charge interest! Remind the executors of this and that if the house sells for less than they declared you can get the IHT reassessed or clain a loss against the house of offset against any gain in other assets.P700DEE said:
AdamV12V said:
Doesn't that depend on the exact timing of the sale? As in if its sold after getting probate, but before distribution (and thus transfer of the property title at HMLR) to beneficiaries, then any growth in value between the valuation at the date of death and the sale would fall on the estate.
Any sale after distribution to beneficiaries (and associated HMLR transfer) would however fall on the specific beneficiary then owning the property.
A quick Google search says that as benficiaries from the will we inherited all the assets on the date of death and the estate is evaluated for IHT as at that date. Whilst it is true both losses and gains are valid regarding Capital gains this shouyld be shared between all the beneficiaries?Any sale after distribution to beneficiaries (and associated HMLR transfer) would however fall on the specific beneficiary then owning the property.
So you have to pay IHT on the estate before the house is sold. Then if the property has gained in value the estate has its ownCGT allowance and you have to pay any cgt very quickly after the sale (60 days). You can use your own government gateway to sign in but you are not paying the cgt, the estate is.
The alternative which we looked at is that the property is signed over to the beneficiaries and then you can use all the beneficiaries CGT allowances instead. I did not go this route as the grandchildren would have “owned” a house and would lost the opportunity to use any first time buyer advantages later on.
Gassing Station | Finance | Top of Page | What's New | My Stuff