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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am an executor and beneficiary in a disputed estate, i need

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I am an executor and beneficiary in a disputed estate, i need to know what capital gains tax is payable in the situation that i am in, My father offered to sell me his house for £140k whilst living with me and under going palliative care, he died before this completed
Probate gained on house only as no other possessions on death @ £140k my fellow executor, sister and beneficiary after first agreeing refused to sign the TR1 form as she said she should get more money. Mediation took place in December last year it was agreed i would buy the house at £190k, there was a caveat in the agreement that said it should all be completed prior to April 5th 2015 being the second tax year after year of death, to be able to use individual CGT allowances, she refused and its now in court with a second hearing due on 22/12/2015.
Neither of us want to carry on but the stumbling block is CGT is it payable if so at what value, are there rules if an estate is in dispute, can the property still be vested after this time etc etc
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Some estates take years to have their administration completed because of disputes. You just need to be aware of the time limit for the CGT exemption that applies to estates. That issue is solved by transferring the property out of the estate. Until the property is transferred into the names of the inheritors, it belongs to the deceased estate. A deceased estate gets a CGT exemption for the tax year of death and each of the next two tax years. See paragraph 2.2 here. Once the property is transferred out of the estate and is sold, each part owner will be entitled to their own CGT exemption to use against their share of any gain no matter how long it takes to sell. The action of transferring the property out of the estate is not a disposal by the estate and there will be no CGT to pay then. The CGT cost of the property is the value at death, £140,000 in your case. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thank you for your swift reply.
Appreciating that we are eight months over the two years date after the year of death Father died October 22nd 2012 and therefore the allowances run out as it where 05/04/15. I was assuming then that the estate and the three beneficiaries "lost" the allowances is that right? Is an assent of the beneficial interest still doable and will that mitigate all or some of the CGT
Customer: replied 1 year ago.
I guess the simple question is can the beneficiaries still at this stage avoid (not evade) all or some CGT please?
If so to whom do we need to go to get this done ?
Expert:  TonyTax replied 1 year ago.
In my answer, I said:
Once the property is transferred out of the estate and is sold, each part owner will be entitled to their own CGT exemption to use against their share of any gain no matter how long it takes to sell. The action of transferring the property out of the estate is not a disposal by the estate and there will be no CGT to pay then." I can't be clearer than that.
If, however, the property is sold within the estate, the estate will only have a CGT exemption for the tax year of death and each of the following two tax years so it would be better to transfer the property out of the estate.
Customer: replied 1 year ago.
Got that thanks, ***** *****'s terms then, we transfer the property out of the estate, so there is no CGT for the estate to pay.
And despite the timescale we as individuals can use our accumulated three years CGT allowances to mitigate and or reduce CGT do i understand that correctly?
Expert:  TonyTax replied 1 year ago.
First sentence: Correct.
Second sentence: Incorrect. As an individual, you only get one CGT exemption per tax year. If you don't use your CGT exemption for any one tax year, you cannot carry it forward to use in the future. Its lost.
Customer: replied 1 year ago.
Last question promise. Once the property is transferred out of the estate can us three beneficiaries use then our existing years CGT allowance to mitigate CGT
,I'm sorry if i'm coming across a bit thick here my confusion arise's out of the rule that a CGT allowance is available up to the end of the second tax year after death, or is does the fact that the asset transfers to us in this tax year negate that rule allowing normal years allowances to kick in..
Expert:  TonyTax replied 1 year ago.
Yes. If you sold the property in the current tax year, having put it into joint names, you will each be able to use your £11,100 CGT exemption against your respective shares of the gain.
The estate is a different taxpayer to you. Estates have their own rules so if assets are disposed of within the estate, the tax liability is on the estate, not the individuals who will have the remaining cash after settlement of all liabilities distributed to them.
Customer: replied 1 year ago.
Brilliant we got there many thanks and enjoy your weekend, is there a way to get a copy of these questions and answers do you know?
Expert:  TonyTax replied 1 year ago.
Thanks.
If I were you, I'd save the webpage address of this question in an email and send it to yourself. The question will always be open to you to return to.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15883
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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