Executors need to be aware that if the value of the house has increased above the date of death value, it could lead to a capital gains tax liability. For the year of death and the following two years executors have a CGT allowance, the current allowance for 2017/18 is £11,300.
The executors could consider saving tax by appropriating the property to the beneficiaries before the sale. The beneficiaries’ capital gains tax allowances can then be set against the gain. It is particularly important to do this if the beneficiary is a charity as charities do not pay capital gains tax.
It is important to remember that if the property is sold before HMRC has issued its agreement to the probate value, they are likely to take the sale price as the date of death value, so additional inheritance tax may become payable. On the other hand, if the property is sold for less than the date of death value the executors can reclaim any inheritance tax which has been overpaid.
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