Tax on share of property of deceased parents?

[im333]

Dear collective hive,

My mother is 1 of 6 siblings and is domiciled in England. She is a widower and receives an NHS (deceased father's) and State pension.

Her mother's property is about to be sold in Pakistan and all her siblings shall be travelling there next month to finalise the sale and collect their share into their newly opened Pakistani bank accounts in PK Rupees.

The property was transferred to their mother, when their father died many years ago and more recently, the remaining siblings, once their mother died.

My questions are:

1. What taxation, if any is my mother laiable to pay, once she transfers funds from her account in Pakistan to her account in England?

2. I'm unsure if inheritance tax is applicable?

3. Might she be subject to CGT? If so, from which period to which other period is this calculable? Would it be when her father died and a proportion of it came into her being, or when her mother died many years later?

I thank you all kindly in advance.

[AGoodman]

No IHT. Two risks of CGT:

1. If the heirs sold the property (rather than executors of the estate), there could be CGT if the property increased in value (in sterling) between death and sale.
2. If the rupees increase in value between receipt and conversion to sterling, there could also be CGT on that increase.

She could set her CGT annual exemption against any gains.

[maths]

No CGT will arise on the conversion of rupees into £. Disposals of foreign currency bank debts not subject to CGT.

[im333]

No IHT. Two risks of CGT:

1. If the heirs sold the property (rather than executors of the estate), there could be CGT if the property increased in value (in sterling) between death and sale.
2. If the rupees increase in value between receipt and conversion to sterling, there could also be CGT on that increase.

She could set her CGT annual exemption against any gains.

So it certainly rose in value between time of death of first parent and then her second, some years later. I'm asuming the starting point in terms of CGT would be death of first parent, when a share would be transferred into mum's name and end point would be sale of the property? She's a low rate tax payer and hasn't used any of her allowance thus far.

[AGoodman]

No, any share that passed through mother's estate would have an acquisition value of MV at her death. Any gain should be minimal unless some shares in the property passed directly from father to children.

[im333]

No, any share that passed through mother's estate would have an acquisition value of MV at her death. Any gain should be minimal unless some shares in the property passed directly from father to children.

Sorry, I'm unsure what MV means?

So, one eighth of the total of the property was put into my mum's name when her dad died (he owned it). There are 7 siblings and the eighth person was her mum. When she died, the remaining seven siblings each had an equal share as it was jointly transferred into their names.

[SteLacca]

So your mother, 6 siblings and one parent all owned the property in equal shares, and now the parent has passed, leaving their share between the 7 children? If so, you have two CG calculations. One based on MV (Market Value) at the time your mother inherited her 1/8th share when her father dies, and a second calculation of the gain on the 1/64 share acquired when her mother passed, again based on market value at that date. CGT is then charged on the total gain.

[maths]

My arithmetic is as follows:

1. Your mother is one of 7 siblings.

2. On death of her father each of the 7 siblings inherited a 1/8th share with the other 1/8th share inherited by father's wife.

3. On death of father's wife (your mum's mum) the 7 siblings each inherited her 1/8th share i.e. each sibling acquired a further 1/56th.

4. As at today's date each of the 7 siblings own 8/56ths of the property.

5. Each sibling receives 8/56ths of the sale proceeds.

6. For UK CGT the cost of the 8/56ths is the market value (MV) of their original 1/8th inheritance at dative of death of mother's father plus MV of their 1/56th inheritance at date of death of father's wife.

[pakistantaxlawyer]

Dear collective hive,

My mother is 1 of 6 siblings and is domiciled in England. She is a widower and receives an NHS (deceased father's) and State pension.

Her mother's property is about to be sold in Pakistan and all her siblings shall be travelling there next month to finalise the sale and collect their share into their newly opened Pakistani bank accounts in PK Rupees.

The property was transferred to their mother, when their father died many years ago and more recently, the remaining siblings, once their mother died.

My questions are:

1. What taxation, if any is my mother laiable to pay, once she transfers funds from her account in Pakistan to her account in England?

2. I'm unsure if inheritance tax is applicable?

3. Might she be subject to CGT? If so, from which period to which other period is this calculable? Would it be when her father died and a proportion of it came into her being, or when her mother died many years later?

I thank you all kindly in advance.

There is no income Tax on Inherited Property in Pakistan. First you will file suit before Pakistani Court regarding legal heirs of the property. You will file income tax return in Pakistan as non-resident for opening bank account in Pakistan. Then you can transfer your money to any other country.
Pakistan Tax Lawyer
http://www.pakistantaxlawyers.com/