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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am about to sell a house that I have inherited for £750k,

Customer Question

I am about to sell a house that I have inherited for £750k, I put it down as £493k purposes (valuation from a chartered surveyor) and got probate granted in May 2014, it came in at £539k and I had a double allowance of £650k. Will I be liable Gains Tax and should I report the increased value of the property.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
.

Was the property valued purposes at £493,000 or £539,000? Have you lived in the property during your ownership of it?
Customer: replied 2 years ago.

It was valued at £493,000 and with cash etc. the total probate value came to £539,000. Nobody has lived in the property since my father passed away in September 2013.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

again.

If you sell the property by 5 April 2015 for £750,000 you will make a gain of £257,000 (£750,000 - £493,000). The first £11,000 of the gain will be exempt from Capital Gains Tax leaving you with a net taxable gain of £246,000.

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the year you sell the property. Assuming you sell the property by 5 April 2015, one of the following scenarios will apply:

1 If your income in 2014/15 including the net taxable gain is £41,865 or less, then all the taxable gain will be charged to CGT at 18%.

2 If your income in 2014/15 excluding the net taxable gain is £41,865 or more, then all the taxable gain will be charged to CGT at 28%.

3 If your income in 2014/15 excluding the net taxable gain is £41,865 or less but more than £41,865 when you add the net taxable gain, then part of the net taxable gain will be charged to CGT at 18% and part at 28%.

I have to say that an increase in the value of the property in less than two years of some £250,000 does seem high unless it is a London property and even then, it is some increase. Given that you appear to be saying that your father's estate benefited from a nil-rate band of £650,000, there is room to have the probate value looked at again.

I'm not an expert on probate law and you would be well advised to consult an appropriately qualified lawyer on whether anything can be done to raise the probate value. If it can be done, you may run the risk of HMRC getting the District Valuer involved to take a look at the property valuation.

I hope this helps but let me know if you have any further questions.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you.

Expert:  TonyTax replied 2 years ago.
Thanks and good luck.