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TonyTax, Tax Consultant
Category: Law
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My mother died 2 years ago and, six months after, the probate

Customer Question

My mother died 2 years ago and, six months after, the probate value of the property was valued at £250k maximum and possibly less.
Work has been done on the property over the past 18 months as it was in disrepair. We have done very basic work and re-rendered outside and plastered walls and got rid of damp so that we can sell it.
We invited estate agents to value it yesterday and we have been given a valuation of between £350k and £375k, mainly because house prices have risen.
Looking on-line today at Inheritance Tax and /or Capital Gains Tax is causing the family great concern and worry.
Can you please advise what our next step should be.
Thank you
Submitted: 4 years ago.
Category: Law
Expert:  TonyTax replied 4 years ago.

Can you point me at the website pages that are causing you worry and explain exactly what that worry is please. How many different valuers did you have look at the property at the time of probate? Did you get detailed written valuations? What was the total value of the estate? Was your mother a widow? If so, did her late husband's estate use his nil-rate Inheritance Tax band?
Customer: replied 4 years ago.
Hm revenue and customs web site
"Capital gains tax if you sell an asset that's gone up in value since the date of death'
A page giving an Example of valuing an estate for inheritance tax.
A page giving interest rates for inheritance tax.

The total value of the estate was less than £250k. There was one valuation and looking at properties sold in that road and area at that time did not exceed this figure. And as I said before the property was in a poor state of repair.
My mother was a widow and T the time of my fathers death he had no monies I did not deal with the estate and therefore do not know if there was joint ownership or if property was passed to my mother in the will. When he died the value of property was nowhere as high as it is now.
Expert:  TonyTax replied 4 years ago.

Is the property still owned by the executor on behalf of the estate or has it bee put into the names of the ultimate beneficiaries of the estate, ie those names in the will? Has the estate generated any income since the death of your mother?
Customer: replied 4 years ago.

the property has not been put into the names of the beneficiaries. The executors are still acting on behalf of the estate.


There has been no income since the death of my mother. There have been costs for repairs.

Expert:  TonyTax replied 4 years ago.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 4 years ago.

Hi again.

If you are concerned about the tax office challenging the probate value of the property, so long as the valuation was based on the market value of similar properties at the time and can be defended, you should have no problems. If you do, I'd encourage you to take professional advise from a local land agent. Apart from the general rise in property prices, you said it was run down and needed work to put in into a saleable state which would have enhanced its value. The cost of capital improvements can be added to the probate value when calculating the gain on the sale of the property. There are some notes on valuing estate property here. You may have read these already.

A deceased estate qualifies for a CGT exemption for the tax year in which death occurred and for each of the following two tax years. Take a look here for more on that. After that, no exemption is due. Any gain that remains after the deduction of the annual CGT exemption if one is due will be taxed at 28%.

If you transfer the property into the names of the beneficiaries before it is sold, each one will be entitled to their CGT exemption to offset against their respective shares of the gain. As the rate of CGT applied to individuals is 18%, 28% or a combination of the two rates depending on that individual's income level, it may be beneficial to transfer the property out of the estate before its sale so that the benefit of multiple CGT exemptions and the possibility of lower CGT liabilities can be had.

If the property is sold by the estate, it will be necessary to complete an estate tax return for the tax year in which the property is sold. The form for 2013/14 can be found here. Clearly, if you sell the property in the current tax year, 2014/15, you will complete an estate tax return for that year.

If the property is put into the beneficiaries names before its disposal, they will each need to disclose their share of any gain in a tax return of their own.

Finally, there are some notes on Inheritance Tax here and on the transfer of an unused Inheritance Tax nil-rate band here.

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