Sale of a deceased's property: calculation of CGT
Discussion
I’m looking for confirmation of my understanding as regards CGT on sale of a deceased’s property. Here’s the situation:
• I am one of two executors of the deceased’s Estate. The other executor is his daughter; I was a good friend.
• He died in August 2024
• He was a widower at the time of death
• His Will leaves everything to three residual beneficiaries
• He owned a property. The Will does not specify that the ownership should pass to any beneficiaries, so the executors are nearing the sale of this property, the proceeds of which will, of course, be added to other assets of the deceased and distributed to the three residual beneficiaries as per the Will.
• For probate purposes, the property has been valued at £525,000.
• The executors are selling the house for £545,000.
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We’re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Is this all correct, please?
R
• I am one of two executors of the deceased’s Estate. The other executor is his daughter; I was a good friend.
• He died in August 2024
• He was a widower at the time of death
• His Will leaves everything to three residual beneficiaries
• He owned a property. The Will does not specify that the ownership should pass to any beneficiaries, so the executors are nearing the sale of this property, the proceeds of which will, of course, be added to other assets of the deceased and distributed to the three residual beneficiaries as per the Will.
• For probate purposes, the property has been valued at £525,000.
• The executors are selling the house for £545,000.
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We’re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Is this all correct, please?
R
The Leaper said:
I m looking for confirmation of my understanding as regards CGT on sale of a deceased s property. Here s the situation:
I am one of two executors of the deceased s Estate. The other executor is his daughter; I was a good friend.
He died in August 2024
He was a widower at the time of death
His Will leaves everything to three residual beneficiaries
He owned a property. The Will does not specify that the ownership should pass to any beneficiaries, so the executors are nearing the sale of this property, the proceeds of which will, of course, be added to other assets of the deceased and distributed to the three residual beneficiaries as per the Will.
For probate purposes, the property has been valued at £525,000.
The executors are selling the house for £545,000.
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Is this all correct, please?
R
Can the beneficiaries not use appropriation and claim all 3 of their personal AEAs?I am one of two executors of the deceased s Estate. The other executor is his daughter; I was a good friend.
He died in August 2024
He was a widower at the time of death
His Will leaves everything to three residual beneficiaries
He owned a property. The Will does not specify that the ownership should pass to any beneficiaries, so the executors are nearing the sale of this property, the proceeds of which will, of course, be added to other assets of the deceased and distributed to the three residual beneficiaries as per the Will.
For probate purposes, the property has been valued at £525,000.
The executors are selling the house for £545,000.
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Is this all correct, please?
R
ETA I'm no expert but should the allowance not be taken off 1st then the balance x 24%?
Hope you don't mind but we are in the middle of doing exactly the same.
You can also deduct EA and solicitor selling costs as well as those incurred by PR's.
Edited by LimmerickLad on Thursday 11th September 13:47
I would concur with both your thinking and your numbers.
Obviously you’ve already factored in any IHT due if applicable which would be due at 40% in any case but in effect paying a lower rate for CGT on the difference is indeed how it works I believe.
Had the beneficiaries inherited the house instead and then sold subsequently I think the calculation would also be identical although at that stage they may have used up some or all of their CGT allowance separately.
Long winded yes imo to your question and not an expert.
Obviously you’ve already factored in any IHT due if applicable which would be due at 40% in any case but in effect paying a lower rate for CGT on the difference is indeed how it works I believe.
Had the beneficiaries inherited the house instead and then sold subsequently I think the calculation would also be identical although at that stage they may have used up some or all of their CGT allowance separately.
Long winded yes imo to your question and not an expert.
That "probate value" may be irrelevant and tax may be payable on the actual selling price. The question is how the "probate value" was obtained,
A) Estate agent guesstimates, or
B) A paid for professional RICS valuation?
Unless a professional, paid for RICS valuation was obtained the value for IHT is the selling price, irrespective of the fact probate has already been obtained and some IHT paid on account (if applicable).
CGT then follows logically. i.e. if the selling price and probate value are the same there's no capital gain to be taxed.
A) Estate agent guesstimates, or
B) A paid for professional RICS valuation?
Unless a professional, paid for RICS valuation was obtained the value for IHT is the selling price, irrespective of the fact probate has already been obtained and some IHT paid on account (if applicable).
CGT then follows logically. i.e. if the selling price and probate value are the same there's no capital gain to be taxed.
Thank you for all the responses to my OP.
Panamax,
I have to say I am rather surprised by what you say. To clarify, for probate/IHT purposes the property was formally valued by a local estate agent at £525,000 and reported to HMRC for probate/IHT accordingly. Probate was obtained in February 2025. We are now well into selling the house for £545,000. My understanding is that the so called “uplift on death” provisions will mean that the value of the house reverts to zero at the date of death and any increase in value on subsequent sale by the executors is subject to CGT. In our case there’s an increase in £20,000 which I thought would be liable for CGT at 24%, so £4800 to pay. You are implying that any increase after probate does not count for CGT. Can that be right? Can you let me know the source of that information, please?
Thanks
R
Panamax,
I have to say I am rather surprised by what you say. To clarify, for probate/IHT purposes the property was formally valued by a local estate agent at £525,000 and reported to HMRC for probate/IHT accordingly. Probate was obtained in February 2025. We are now well into selling the house for £545,000. My understanding is that the so called “uplift on death” provisions will mean that the value of the house reverts to zero at the date of death and any increase in value on subsequent sale by the executors is subject to CGT. In our case there’s an increase in £20,000 which I thought would be liable for CGT at 24%, so £4800 to pay. You are implying that any increase after probate does not count for CGT. Can that be right? Can you let me know the source of that information, please?
Thanks
R
The Leaper said:
Thank you for all the responses to my OP.
Panamax,
I have to say I am rather surprised by what you say. To clarify, for probate/IHT purposes the property was formally valued by a local estate agent at £525,000 and reported to HMRC for probate/IHT accordingly. Probate was obtained in February 2025. We are now well into selling the house for £545,000. My understanding is that the so called uplift on death provisions will mean that the value of the house reverts to zero at the date of death and any increase in value on subsequent sale by the executors is subject to CGT. In our case there s an increase in £20,000 which I thought would be liable for CGT at 24%, so £4800 to pay. You are implying that any increase after probate does not count for CGT. Can that be right? Can you let me know the source of that information, please?
Thanks
R
I think what Panamax is saying is that the probate value declared to HMRC is a wild guess by the estate agent, and subject to revision post probate. It might be an interesting conversation with HMRC though. Assuming you werent on the verge of paying IHT before, would HMRC agree to revise the estate probate value and get nowt, rather than happily accepting a small bit of CGT? Panamax,
I have to say I am rather surprised by what you say. To clarify, for probate/IHT purposes the property was formally valued by a local estate agent at £525,000 and reported to HMRC for probate/IHT accordingly. Probate was obtained in February 2025. We are now well into selling the house for £545,000. My understanding is that the so called uplift on death provisions will mean that the value of the house reverts to zero at the date of death and any increase in value on subsequent sale by the executors is subject to CGT. In our case there s an increase in £20,000 which I thought would be liable for CGT at 24%, so £4800 to pay. You are implying that any increase after probate does not count for CGT. Can that be right? Can you let me know the source of that information, please?
Thanks
R
randlemarcus said:
I think what Panamax is saying is that the probate value declared to HMRC is a wild guess by the estate agent, and subject to revision post probate. It might be an interesting conversation with HMRC though. Assuming you werent on the verge of paying IHT before, would HMRC agree to revise the estate probate value and get nowt, rather than happily accepting a small bit of CGT?
This is all completely normal. Probate is obtained on the basis of an IHT100 tax form that states the estimated value of the property based on one or two estate agents' opinions (obtained free of charge with view to future marketing of the property) and IHT is paid on the whole estate including that value. Once probate has been received the executors have power to sell the house - you can't sell a house at all without probate (or Administration). Once the house has sold the tax position is updated to HMRC with the actual selling price and either additional IHT paid or a refund claimed.The alternative is to get a paid-for professional RICS valuation as at the date of death.
a) This will be essential if the house is going to be passed to a beneficiary without selling it.
b) This may be desirable if there will be significant delay after date of death before the house is sold. Obviously the potential attraction is paying 24% CGT on the difference rather than 40% IHT on the difference.
I’m not sure how applicable Panamaxs’ comment was to your circumstances but I think I got his point.
If HMRC has accepted the lower estimate of £525k for probate ( and any applicable IHT paid on the whole estate accordingly ) and then the house realised a further £20k it’s just that element of uplift quantum that attracts CGT.
If HMRC has accepted the lower estimate of £525k for probate ( and any applicable IHT paid on the whole estate accordingly ) and then the house realised a further £20k it’s just that element of uplift quantum that attracts CGT.
Panamax said:
This is all completely normal. Probate is obtained on the basis of an IHT100 tax form that states the estimated value of the property based on one or two estate agents' opinions (obtained free of charge with view to future marketing of the property) and IHT is paid on the whole estate including that value. Once probate has been received the executors have power to sell the house - you can't sell a house at all without probate (or Administration). Once the house has sold the tax position is updated to HMRC with the actual selling price and either additional IHT paid or a refund claimed.
The alternative is to get a paid-for professional RICS valuation as at the date of death.
a) This will be essential if the house is going to be passed to a beneficiary without selling it.
b) This may be desirable if there will be significant delay after date of death before the house is sold. Obviously the potential attraction is paying 24% CGT on the difference rather than 40% IHT on the difference.
I posted before this but I’m now a tad confused. The alternative is to get a paid-for professional RICS valuation as at the date of death.
a) This will be essential if the house is going to be passed to a beneficiary without selling it.
b) This may be desirable if there will be significant delay after date of death before the house is sold. Obviously the potential attraction is paying 24% CGT on the difference rather than 40% IHT on the difference.
Form was 400 with then house etc being on 405 presumably ?
But if HMRC accepted it , with then the update value why would further IHT be due ( assuming of course any due in the first place ) rather than CGT ?
Apologies if I’m being dense though.
alscar said:
it's just that element of uplift quantum that attracts CGT.
...or IHT. Most likely IHT unless there's been a long delay. OP needs to decide whether,a) The initial valuation was only approximate - IHT, or
b) The initial valuation was correct but the market has moved in the intervening period - CGT.
Since the IHT has to be paid within 6 months of death (or interest will start to run on it) it's very common for the house value to need to be adjusted afterwards.
https://crestsurveyors.co.uk/what-happens-if-house...
https://crestsurveyors.co.uk/what-happens-if-house...
alscar said:
But if HMRC accepted it....
It's up to the executors to get it right rather than up to HMRC to query it.The catch with this stuff is executors are personally liable for any wobbles in connection with estates and tax so if all the cash is distributed and then HMRC come asking questions it may well be the executors who have to dip into their own pockets to pay the additional tax.
If HMRC were to see a CGT return which showed a big house price increase in a short period of time declared for CGT they may well think, "Hmm, has the market really moved that far that fast? Let's ask a few questions and see if we should have received 40% IHT rather than 24% CGT on the apparent gain."
As always with HMRC it's relatively unlikely they will ask questions but once they start they'll soon find out whether things add up properly. My understanding is they ask questions either based on suspicions or completely at random. I have experienced the random variety and, happily, been able to send rock solid answers by return.
Thanks again, very grateful.
As reported for probate/IHT:
1. Total estate after deductions £800,100
2. Less residence nil rate band £350,000
3. Chargeable (1 - 2) £450,100
4. Gifts £40,200
5. Chargeable value (3 + 4 £490,300
6. Nil rate band £325,000
7. Transferrable nil rate band £325,000
8. Value for IHT calculation (5-6-7) 0
9. IHT payable 0
There has been no comeback (so far) from HMRC on the reported information for probate.
So, as per panamax’s recent posts, the executors must take a view as regards the property valuation for probate:
• If we consider the probate valuation as being correct, CGT will be paid at 24%.
• If we considerate it as an approximate valuation, IHT is potentially payable, but not in this case as the total value of the estate being realised is below the value for IHT calculation purposes.
Is this correct?
Maybe we should report the increase in value to HMRC and tell them we consider the probate valuation as being approximate so there is no IHT due on the increase in value, nor any CGT payable.
R.
As reported for probate/IHT:
1. Total estate after deductions £800,100
2. Less residence nil rate band £350,000
3. Chargeable (1 - 2) £450,100
4. Gifts £40,200
5. Chargeable value (3 + 4 £490,300
6. Nil rate band £325,000
7. Transferrable nil rate band £325,000
8. Value for IHT calculation (5-6-7) 0
9. IHT payable 0
There has been no comeback (so far) from HMRC on the reported information for probate.
So, as per panamax’s recent posts, the executors must take a view as regards the property valuation for probate:
• If we consider the probate valuation as being correct, CGT will be paid at 24%.
• If we considerate it as an approximate valuation, IHT is potentially payable, but not in this case as the total value of the estate being realised is below the value for IHT calculation purposes.
Is this correct?
Maybe we should report the increase in value to HMRC and tell them we consider the probate valuation as being approximate so there is no IHT due on the increase in value, nor any CGT payable.
R.
Thanks for your very clear comments.
Still not knowing whether any IHT was indeed paid / applicable on the whole estate adds a slight dimension.
If it wasn’t then I imagine HMRC will happily accept the additional CGT payment.
If it was then as only a modest increase in value will be interesting to see if they do insist on 40% or accept the Capital Gain - which is what it is.
I was basing my reply on probate for a third party who in turn between their death and probate also received an incoming inheritance.
Court case involved.
IHT paid according to the Solicitor’s / Executors papers with then a small CGT uplift when the house sold.
If I’d read your last post before receiving I wouldn’t have just taken this as as gospel but they did confirm it was 100% agreed !
Still not knowing whether any IHT was indeed paid / applicable on the whole estate adds a slight dimension.
If it wasn’t then I imagine HMRC will happily accept the additional CGT payment.
If it was then as only a modest increase in value will be interesting to see if they do insist on 40% or accept the Capital Gain - which is what it is.
I was basing my reply on probate for a third party who in turn between their death and probate also received an incoming inheritance.
Court case involved.
IHT paid according to the Solicitor’s / Executors papers with then a small CGT uplift when the house sold.
If I’d read your last post before receiving I wouldn’t have just taken this as as gospel but they did confirm it was 100% agreed !
Personally I would report the uplift of £20k and offer the resultant 40% CGT less allowance as you originally said.
I wouldn’t be suggesting the original value was only approximately correct as genuinely don’t think it was.
Why ?
If you are wrong they will tell you - you will save a bit of tax on this basis.
But they might also then re look into your original figures again and then ?
But Panamax’s comments are in my ear so am curious to see what he would advise ?
I wouldn’t be suggesting the original value was only approximately correct as genuinely don’t think it was.
Why ?
If you are wrong they will tell you - you will save a bit of tax on this basis.
But they might also then re look into your original figures again and then ?
But Panamax’s comments are in my ear so am curious to see what he would advise ?
As houi.e 'residence nil-rate band' is an allowance of up to £175,000se was not left to any son/daughter the IHT allowance would be £325k or twice this to include ex wifes allowance.
i.e 'residence nil-rate band' is an allowance of up to £175,000 would not apply.
As house is undervalued 40% due on additional £20k i.e another £8K)
presume yo can also adjust expenses if these have changed since probate.
Yes the value for CGT is reset to ££545k for any future owner however this is really irrelevant to yourself as this is used in calculation by them The current £3k CGT is taken from whatever gain they make since purchase date
CGT is going to catch a lot of second property owners out with the CGT allowance having been reduced from £12kish to £3k.
Can be mitigated to some extend if more than one owner on deeds and obviously if is new owners residence and left in will to child then total estate value can be upto £1million
£325k+175K=£500k x2
Just seen solicitors calc
what do you mean by
His Will leaves everything to three residual beneficiaries
The resident nil band rate only applies if house left to a direct descendent - so presume at least one is. This changes things but reset of value for CGT will still be set at £.545k
Presume if one or all beneficiaries are selling house for £545k uplift for CGT will be minimal. Each has own £3k CGT so total tax gain will apply if it is more then £3k -1 owner or £9k if three owners
i.e 'residence nil-rate band' is an allowance of up to £175,000 would not apply.
As house is undervalued 40% due on additional £20k i.e another £8K)
presume yo can also adjust expenses if these have changed since probate.
Yes the value for CGT is reset to ££545k for any future owner however this is really irrelevant to yourself as this is used in calculation by them The current £3k CGT is taken from whatever gain they make since purchase date
CGT is going to catch a lot of second property owners out with the CGT allowance having been reduced from £12kish to £3k.
Can be mitigated to some extend if more than one owner on deeds and obviously if is new owners residence and left in will to child then total estate value can be upto £1million
£325k+175K=£500k x2
Just seen solicitors calc
what do you mean by
His Will leaves everything to three residual beneficiaries
The resident nil band rate only applies if house left to a direct descendent - so presume at least one is. This changes things but reset of value for CGT will still be set at £.545k
Presume if one or all beneficiaries are selling house for £545k uplift for CGT will be minimal. Each has own £3k CGT so total tax gain will apply if it is more then £3k -1 owner or £9k if three owners
Edited by twokcc on Friday 12th September 15:15
Edited by twokcc on Friday 12th September 15:17
I would suggest getting specific advice to confirm, but you can file form C4 to amend the value declared in IHT400
https://www.gov.uk/hmrc-internal-manuals/inheritan...
https://assets.publishing.service.gov.uk/media/679...
https://www.gov.uk/hmrc-internal-manuals/inheritan...
https://assets.publishing.service.gov.uk/media/679...
[quote=The Leaper]
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Isn't the allowance of £3,000 to be deducted from the capital gain and not the amount of CGT due? Therefore, a gain of £20,000 would be reduced by £3,000 making a taxable gain of £17,000 and tax at 24% would make a liability of £4,080 instead of £1,800.
So, on a capital gain of £20,000 and with the CGT rate currently at 24%, I reckon that the executors will liable to pay £4800.There is a capital gains allowance of currently £3000 so, assuming the Estate has no other capital gains, the executors are due to pay £1800 to HMRC. We re aware that we are due to pay any CGT to HMRC within 60 days of the sale of the property.
Isn't the allowance of £3,000 to be deducted from the capital gain and not the amount of CGT due? Therefore, a gain of £20,000 would be reduced by £3,000 making a taxable gain of £17,000 and tax at 24% would make a liability of £4,080 instead of £1,800.
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