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Where Taxpayers and Advisers Meet

Buying from probate

Joined:Wed Nov 01, 2023 12:33 am
Buying from probate

Postby Nss1710 » Wed Nov 01, 2023 12:35 am

Hello All,
My husbands uncle passed away and left an estate worth around £700,000. Apparently there was already the intention to leave my husband one of his properties but when it all came out in the wash no will was made.

my husband has always intended to build a house on this land and has talked many times with the family about this.

anyway, my husbands mum is the executor and went to the solicitors and told her nothing can be done the ITH bill is £150k. Sell the properties. We obviously really wanted it. it’s been abandoned for 30 years inhabitable and derelict. We had charteeed surveyor out to discuss planning who told us there was a argument for abandonment on the ‘premises’ due to the time it’s been left empty and told us it was nothing more then hope value as planning would be difficult and he would pay more then 150-200k. We offered 300k a another person in the village £200 and someone else 300k. So they were going to give it to the other 300k interested person, so we offered the same and they accepted.
Since we’ve waited for probate the sale price was agreed and put through the solicitors, we applied for planning permission (still awaiting decision) and we were allowed to do some clearing in preparation. It’s now obviously 1000% better now we’ve opened it up and paid at our own expense to cut down some trees that had fell into the house as they weee unsafe and we couldn’t get into it to properly see what we wanted to do.

anyway, we are near completion and they have called to say HMRC are investigating a undervalue in both properties (the other has completed, and we are due to complete this week)

They have said their solicitors have said they can’t sell it to a relative either and have been asking why there has now been a planning application submitted.

We have spent out loads on planning, clearing, legal fees and loads more! What’s the difference to selling it to us or one of the other people that they would of sold at the same price. We have used a bridging loan for funding which we will still have to pay the fees on regardless.

we are at a loss as to what to do. We don’t want to get them into trouble but we also don’t want to loose money.

has anyone ever dealt withthiS before

Joined:Mon Feb 13, 2017 10:09 am

Re: Buying from probate

Postby someone » Thu Nov 02, 2023 11:33 am

They have said their solicitors have said they can’t sell it to a relative either and have been asking why there has now been a planning application submitted.
This is legal, not tax, but
a) it's wrong that you cannot sell to a relative. You can almost always sell to a relative. The problem with selling to a relative is establishing whether the property was sold at a value different to market value. But if you've matched the highest offer on the property from an unconnected third party then it's hard for anybody, including HMRC, to argue that it's not a transaction at market value!

b) Anybody can submit a planning application for anything! I could submit a planning application to demolish the houses of parliament and build an amusement park on the site. It wouldn't get granted, obviously, but you don't need to have any interest in the land to submit a planning application. I don't know how common it is to submit planning applications for land you don't own but the obvious reason would be that you're only prepared to buy it if the application is granted.
(I have no idea how this affects market value, clearly land with a pending application is different from land with a granted application, but in the HMRC case the land value at death is "without a granted application" so the value is that which an unconnected person would pay not knowing if the permission will be granted)

Note that the property can be sold two different ways - I don't think it affects the IHT. Either the executors can sell to you or the beneficiaries of the will can sell to you after the estate is distributed. I don't know exactly how it works but in the former, the proceeds of sale can be used to pay the IHT bill while in the latter, the IHT bill will have to be paid first. (But you could lend the money to the estate to pay the bill).

Note that there is a third way to get the property to you, and that's to vary the will (I think this can be done even absent a will). The beneficiaries have to agree to this - but if everyone was in agreement that this was what your uncle intended then it might be possible.

Additionally, if your uncle had a (living) spouse, then it's possible to vary the will and avoid all the IHT completely.

Joined:Fri May 16, 2014 3:47 pm

Re: Buying from probate

Postby AGoodman » Thu Nov 02, 2023 12:44 pm

As someone said, of course you can sell to a relative. I don't believe the solicitors have actually said this in these terms. There is a potential conflict/self-dealing point but the residuary beneficiaries of the estate can consent to it, which avoids any problem (unless the residuary beneficiaries have not consented?)

On the valuation point: if the district valuer is looking at the values, you just reply explaining how you reached the valuations you submitted. If necessary (and you haven't done it already), the administrator instructs the chartered surveyor who valued the land to argue the point with HMRC on the estate's behalf and defend his position. It isn't necessarily a problem - worst case scenario, the estate has to pay a bit more tax - it doesn't stop the estate selling to you.

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