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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4198
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I am the executor of my mothers estate I have 3 sisters and

Customer Question

I am the executor of my mothers estate
I have 3 sisters and we are all beneficaries
Probate has been granted to me ( did it on my own)
One of my sisters wants to buy the property
Can we legally deduct her share from the selling price
We then sell it to her at a much lower price and her stamp duty is much less
Also if we reduce the price in which we sell ( below the probate valuation ) avoid capital gains tax
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
There is no Capital Gains Tax on death. All the assets of the deceased are aggregated and subject to Inheritance Tax (IHT) which is levied at 40% flat rate on any surplus over 325K. If the deceased's estate bequeaths over 10% for charitable purposes the rate falls to 36%.
Your mother's estate must be distributed in accordance with her will if she left one; if not in accordance with the rules on Intestate Succession (IS). If you wish to vary her will then you must obtain the consent of all the beneficiaries and enter into a deed of family arrangement, effectively re-writing the will or altering the IS rules. If this is the case you would be well advised to consult a local solicitor in this matter.
In this case it all depends upon the entitlement of the siblings and the value of the estate. Clearly if the probate value of the house is in excess of individual's entitlement then a deed of family arrangement is inevitable.
There is no stamp duty land tax due on transfer of inherited land, you do not even need to notify HMRC so clearly you do not want to get into a position of 'selling' the house, just passing it on inheritance, further making a deed of family arrangement all but inevitable. Of course if the sibling is taking the house without breaching her share of the estate then no problem arises and it can just become part of her distribution, the probate value being deducted from her share as it were.
I do hope that I have been able to shed some light on you and your siblings situation
Customer: replied 2 years ago.
Hi keith
second attempt
Property is valued at 690k
my sister is willing to pay that - she asked if she could do the following
subtract her part of the benificary ( 1/4) and buy the house at £518k less stamp duty - no capital gains for the estate as property was valued at £600k at probate
yes there was a will splitting estate 4 ways
thanks
patrick
Expert:  bigduckontax replied 2 years ago.
Right Patrick, it looks to me as though the deed of family arrangement route is essential here as the conditions of the will are being varied. If such a deed is entered into, and it requires the consent of all beneficiaries, then the house will be transferred as part of the distribution of the deceased's estate and stamp duty does not come into it, nor indeed is capital gains tax relevant as it does not apply in the case of death. You must consult a local, trusted solicitor to draw up the deed and also arrange the property conveyance.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.