Please forgive the long story but I think it’s all needed to fully understand the question at the end.
My late mother died in February this year, I dealt with her estate myself, have received a grant of probate and distributed her estate as per her will to myself and 3 siblings.
When I completed the IHT Estate plan I valued her property at £300,000. This was based on the most recent sales of similar properties in the same road plus a little market increase over time.
The total value of moms estate was around £280k well within the IHT threshold applicable to her estate of £425k as she left her estate solely to her surviving children. Leaving a good deal of unused IHT allowance.
As Mom owned a 50% share of the house as a tenant in common with her partner her share was worth £150k though this was reduced by 10% to £135k for the purposes of the IHT return as the remaining 50% was not owned by a relative or spouse.
4 Months after this valuation her surviving partner also died leaving his share of the house to his 3 children and between the 7 of us we have now decided to sell the property.
Having now had 2 independent estate agent valuations on the house at £300k I am happy that my original valuation was correct. However, as the house has a 300ft garden with vehicular access both of the valuing agents have said that there is a much greater value in the garden if this was to be split from the house and sold separately to a developer as a plot with building potential. Their valuation of the house and smaller garden plus the building plot is approx £500k. This opportunity would have existed in February but I didn’t spot it , had I done so then I would have declared a higher valuation at the time.
Moms share of this would be £225k (£250-10%) which increases the value of her estate to around £370k but this is still below the IHT threshold of £425k so I don’t have to inform HMRC of the change because there’s no change to the duty due.
My understanding is that the difference between the valuation in Feb and the eventual sale value will be subject to CGT.
So, finally to the question! Can I avoid the CGT liability and use up some of the unused IHT allowance by informing HMRC that I’ve messed up on the initial valuation?
Thanks for giving it your time to read to the bottom!
- Home
-
Tax News
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice and Methods
- Professionals in Practice & Industry
- General
- TaxationWeb
-
Tax Articles
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings and Investments, Pensions and Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice & Methods
- Professionals in Practice & Industry
- General
- Tax Tips
-
Tax Forum
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations and Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practices & Methods
- Professionals in Practice & Industry
- General
- Tax Jobs
- Get in Touch