Selling an inherited property: capital gains tax advice
Published by Property Saviour
The UK's No.1 Fast House Sale Company
March 25, 2015 - Read time: 3 minutes
When selling an inherited property capital gains tax is only due is assets valued in excess of £325,000. Inheritance tax is a tax that needs to be paid if a deceased persons assets or estate are valued over a certain threshold; this figure can change and is set by the government.
The current threshold for inheritance tax is £325,000 per person. If the deceased had a spouse of civil partner that died before them, the inheritance tax threshold is twice that of the current threshold making it £650,000. The great news is that when selling inherited property from a spouse or civil partner there is no capital gains tax to pay.
When it comes to selling an inherited property with tax most probate estates are not affected by inheritance tax as they are below the threshold.
How to avoid capital gains tax on inherited property? Capital gains tax only applies if you decide to keep the property and at some point in future, sell the property when its value has increased then you will have to pay the capital gains tax. Not paying capital gains tax could land one in jail.
Will I have to pay inheritance tax on any money I inherited too? Inheritance tax is payable by the Executor if the estate is valued above £325,000 threshold at the time of writing. If you are a beneficiary, you do not need to pay seperate inheritance tax once you received proceeds of your inheritance.
In this blog we answer most commonly asked questions when selling an inherited property.
What is included within a probate estate when selling inherited property?
- Joint Accounts
- Pension Scheme
- Insurance policies
It is required that the assets are given a “probate value” this is simply the market value, what price they would fetch on the open market. It is important to obtain professional valuations as this information will be required by the HMRC. This will determine how much capital gains tax is due on your inherited property estate.
It is important to remember that any major gifts that the deceased person gave in the last seven years must be disclosed as they might be liable for inheritance tax. The government gives guidance on this under the “seven year rule”.
What if it is a jointly owned property?
If the deceased person owned a property with another person, the property doesn’t form part of the estate. The value of the deceased persons share must be included when calculating the value of the estate for instance value of property is £500,000 therefore, assuming a 50:50 ownership, the deceased’s estate is worth £250,000. Therefore, no capital gains tax is payable when selling inherited property.
At Property Saviour we understand the stress and upset when selling a probate property. Especially when this is usually the family home. The last thing that you need, is to deal with estate agents, obtaining valuations, placing on the market and dealing with viewings. We can take that stress away.
If you have inherited a property we can help you navigate your way through the red tape. Property Saviour can buy your inherited property. To find out more click here.