CGT on increase from probate valuation to sale price of house

[Rose123]

Have looked through other threads but can't see an answer to my questions.

My mother died 14 months ago, she owned the house and left it directly to all her children equally, leaving my dad with the right of residence. This was the only asset she owned.
My dad has since passed away. We have now completed probate for both of them and the house has now been sold.
There is no CAT implication as the value isn't high enough. However there is a CGT implication as the house sold for more than the probate valuation.

(a) Can the probate costs of 6k for my mother's will be taken into account as a "Cost of acquisition"?
I'm assuming we couldn't include probate costs for my dad.

(b) Given the short space of time between the valuation of the house and the sale of the house, it would appear the the house was under valued for probate. I'm aware that it's hard to put a value on a house and you don't know how much it will sell for. However is there any provision for doing anything to reduce this gain given this short timeframe?

TIA

 

[Bronte]

However is there any provision for doing anything to reduce this gain given this short timeframe?

This is what you should focus on. Clearly valuations are very subjective. In such a short time frame if the increase is massive, then the original valuation is arguably incorrect.

Odd your mother owned the house alone, and it was the family home, and it was her only asset. Did she inherit it?

(Rose sorry for you losses, that's a hard blow two in quick succession)

 

[Brendan Burgess]

This comes up a lot. When CAT is not a problem the value should be on the higher side for probate and not on the lower side.

I don't think you can turn around now and say - "Sorry, we thought we would get away with a low valuation, but now we want it higher".

 

[Rose123]

Thanks. We never wanted to "get away with a low valuation" - the valuation was way below the CAT thresholds because of the number of children inheriting it. However with all the global uncertainty the valuer needed to be able to stand over their valuation and I suppose it's hard for them to guess accurately, and maybe we were lucky too with the sale price. Do you think it is something we can argue and if so how would we go about it?

If anyone knows the answer to my question re the probate costs that would be very helpful too.

 

[ClubMan]

(a) Can the probate costs of 6k for my mother's will be taken into account as a "Cost of acquisition"?

I wouldn't have thought so. Surely most or all of these costs would have been incurred even if there was no property as part of the estate? If done of these costs are specifically associated with the property (e.g. valuation fees, estate agent fees, conveyancing fees, etc.) then that's a different matter and those could presumably be split out and apportioned to the property sale. But your solicitor should probably be able to advise on this question.

 

[POC]

Condolences on your loss.
I can't answer your question, but I think you've done really well to get probate through and sell the property so quickly. It's taking me much longer.

 

[Rose123]

I wouldn't have thought so. Surely most or all of these costs would have been incurred even if there was no property as part of the estate? If done of these costs are specifically associated with the property (e.g. valuation fees, estate agent fees, conveyancing fees, etc.) then that's a different matter and those could presumably be split out and apportioned to the property sale. But your solicitor should probably be able to advise on this question.

Unfortunately the solicitor refused to give us any "tax advice" and he told me we have to do the CGT returns ourselves, they only do it for properties worth over a million. The probate cost related purely to the house as that was the only asset my mum owned - and passed on to us - so in my head it is most definitely a "cost of acquisition" but I don't know if Revenue would see it that way.

 

[Daphne]

Sorry for your loss.

I don’t think you can deduct the probate costs because they are not YOUR costs of acquisition, they are a cost of the estate - in the same way that you can’t deduct the seller’s costs on a house that you purchased from them when you go to sell it.

You personally didn’t incur the cost - the fact that you inherited everything after the estate was finalised and the costs were paid is not relevant. If there were any costs you incurred personally as part of the property being put into your name you may be able to deduct that.

But it’s probably worth getting a definitive answer from a tax advisor.

 

[Rose123]

Thanks Daphne