Inheritance tax

[Edric]

Hi, I have the task of sorting out my mother's estate for IHT and probate. She was in a care home but still owned her flat which was tenanted at the time of her death. Valuing the property on the low side, it does require modernising and has a tenant, keeps the estate just below the tax threshold thus simplifying the application. What happens when we eventually sell in say 12mnths time for more than the probate valuation? Will we be taxed on the gain as CGT or as IHT?
Many thanks for any advice, Kind Regards Ed.

[Peter D]

The probate value can be revisited and potential trigger IHT. However what was her husbands situation as the IHT threadhold may be twice what you think. Regards Peter

[Edric]

Hi Peter,
Many thanks for the reply. Unfortunately my father died way back in 1961! He falls into the extremely unfairly treated group who paid 'estate tax' on their family home/assets and cannot now pass on any added IHT allowance. It's a small group of very elderly widows (my mother was 90) who the government are excluding.
I hoped that we could just declare the gain as CGT (using annual allowance and at 18%) but if we are obliged to go back to the revenue and pay IHT at 40% there seems little point in staying just below the £325000 mark, am I right?
Regards Ed.

[Peter D]

If you renovate the property prior to sale then I doubt the Probate value will be revisited and you may be able to dispose of the property under CGT. Photographs before end after and all the receipts can help you support your case. Regards Peter

[Edric]

Sounds like it's worth a try, thanks, Ed.

[maths]

IHT does not seem to be an issue.

The sale of the property can be made either by your mother's executors under her will or by those who under the will inherit the property.

A decision needs to be made therefore who should sell as this will then determine how the asset is dealt with by the executors.

Who inherits under the will?