Selling house for more than probate valuation but less than IHT nil rate allowance.

[JS1000]

Hello everyone.

I wonder if anyone could advise me if I might cause myself any problems by selling my inherited house for more than the probate value (but still bringing the total estate value to less than the IHT nil rate band). Incidentally, this house is also my primary residence.


The basic details of my situation are:

Sole beneficiary
Date of death, October 2016
Probate granted March 2017
IHT nil rate allowance £650,000
Estate total value £560,000
House value submitted £420,000 (as part of the above estate total value)
Amount therefore under the IHT threshold £90,000.

If I happen to sell my house for perhaps £500,000 (not inconceivable, for various reasons, despite my probate valuation being quite generous considering recent comparable local sales), am I likely to have problems with HMRC, even though that would still bring the total estate value to £10,000 below the £650,000 nil rate allowance?

This house in question is also my primary residence, and I presume that this means I wouldn't have to pay capital gains tax on anything that could be determined a 'capital gain'. If I understand it correctly, because no inheritance tax was payable on the estate, the house's value hasn't actually been established in any meaningful capacity. Is that correct?

If a District Valuer became involved, I hope the worst that could happen is that he/she would say (words to the effect of) 'oh that's nice' to my £500,000 sale, and observe that everything is still within the IHT nil rate allowance. Am I being reasistic with my hypothetical scenario?

Thank you very much in advance if anyone could comment on my situation with a likely outcome, if indeed I sell my house for more than the probate valuation.

[AnthonyR]

HMRC only really have an issue with things where they think they are losing out on tax.

At the date of death the estate was less than the 2xNRB so no IHT. Even with the uplift there's no IHT.

If you sell the property and it has been your main residence since inheriting it (or before) then there's no CGT.

As such, HMRC are unlikely to really care.

If, however, the sale value indicates that the probate value was inaccurate and would have taken the estate over the IHT threshold at the time of death then this may cause issues, but bearing in mind the date of death was 6 months ago you would have expected a growth in value anyway.

[JS1000]

Thank you for your helpful reply. That is reassuring.

The sale value now would have to be £510,000 to even reach the IHT threshold, and it couldn't reasonably have been deemed of that value before I started doing it up, so even without any growth in value to take into account, I ought to be fine.

Thanks again.