CGT and a Gift with reservations

[dmdqlett]

On 12/3/93 Mary’s Nana sold her house in order to move next door to her son, The house was bought in her son (Marys Uncle) and daughter’s(Mary’s Mother) name.It was deemed as a Gift with reservations.
The purchase price was in the region of £98,000.00
Mary’s mother passed away June 2009 and her mother’s half of the house in question was left to Mary and her two brothers.
Mary’s Nana passed away last month and the house is now up for sale, we expect to sell it for around £150,000.
We understand that there will be no inheritance tax to pay as the estate is well below the threshold but how is the capital gains tax worked out?
From what I understand from Mary’s mothers half is treated as the following http://www.hmrc.gov.uk/trusts/prs_cg.htm When you take control of the deceased's assets, they are treated as if you had acquired them at their market value at the date of death. Does that mean that for CGT the house is valued at the time of Mary’s mother’s death and then when it sells? Therefore we pay tax on the profit from then until when the house sells???
Mary’s uncle says that Mary and her brother’s are each liable for their capital gains tax, but I understand that as executor he should pay the capital gains tax before paying out the estate.
Please can you help clarify the situation?

[pqtaxation]

.... Mary’s uncle says that Mary and her brother’s are each liable for their capital gains tax, but I understand that as executor he should pay the capital gains tax before paying out the estate.

From what you write, Mary’s uncle appears to be right.

Mary and her brothers acquired a 50% interest in house on their mother’s death in 2009 at a base cost of based on the probate value.

When house is sold in 2012 the gain they will realise a gain of 50% of net sale proceeds less 2009 base cost.

Presumably Mary’s uncle is executor of Nana’s estate and is arranging the sale of the house. But the house is 50% owned by him (whose base cost dates from 1993) and 50% by Mary and her brothers (whose base cost dates from 2009 when they inherited it). The house was not owned by Nana though its value was aggregated with her death estate in her IHT account because of the reservation of benefit by her.

The two values of a purchase cost in 1993 of £98k and an estimated market price of £150k in 2012 do look questionable --- are both for the entire house on a like for like basis as surely house price inflation in the last ca 20 years has been more than ca 50%?

[maths]

The key issue is whether in 1993 Mary's uncle and Mary's mother each acquired a beneficial interest in the property.

Assuming this to be the case then CGT is calculated for each individual with the base cost for Mary plus brothers being based on market value at the date of Mary's mothers death.

Mary's nana's death is irrelevant other than the house is now available to be sold. No beneficial interests pass on her death. The executors have nothing to sell re the property and are thus irrelevant to the CGT.

Uncle thus appears to be correct.

However based on the figures no CGT should arise on the part of mary or brothers.