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Where Taxpayers and Advisers Meet

Property or cash

Squibbs
Posts:30
Joined:Mon Sep 12, 2011 1:56 pm
Property or cash

Postby Squibbs » Mon Aug 15, 2022 3:39 pm

Hello All.
A friend of mine has just found out he has inherited a property, via the executor.
The house is old, and he doesn't want to spend money doing it up, before selling. What he wants is the money it is worth.
The property will be tax free as far as he is concerned.
First question he wants answering is, can the exector sell the property and he inherits the proceeds not the property, also tax free?
Second question is, If he has to have the property, can he sell it straight away, will he have to pay tax in his proceeds?

Kind regards.
Squibbs

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Property or cash

Postby AGoodman » Mon Aug 15, 2022 6:49 pm

The executor can sell the property if the friend is inheriting as a residuary beneficiary. If he is inheriting as a specific legacy (i.e. there is a legacy saying "I leave 2 Acacia Avenue to J Bloggs" or words to that effect) then no, the executor would usually transfer it.

The tax difference is not massive, it really depends whether the sale price exceeds the declared probate value (i.e. market value at death). Any gain is subject to capital gains tax. The estate will get a full annual CGT exemption (£12,500 of gains) for 2 and a bit years from the death and pay the same rate of tax so if they are not making any other disposals, it will likely not make any difference whether the executor sells or transfers him the property for him to sell.

Either way, the person who sells has to submit a CGT declaration within 60 days of completion irrespective of whether there is any tax to pay.


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