capital gains or inheritance tax?

[orange n blue]

Need some advice please. My sister in law and her two brothers have just been left her uncles house in his will. They have had the house valued to sell it but the estate agent has suggested that they refurb it and sell for a much higher price in say six months.
The house has been valued around £250k but th agent reckons it could fetch closer to £300k in good condition.
If they agree to do it up and sell later, would they pay CGT on the intial £250 or just on the profit made over that amount.
If they sell now, would they be liable for CGT or IHT?

[sumo69]

The house in its current state and value forms part of the estate - this is subject to IHT if the estate is valued in excess of the exempt amount of £325,000 (or perhaps £650,000 if he is widowed and none of the spouse's exempt band was used on her demise).

The house's value is then deemed to be the probate value for CGT purposes, meaning the potential taxable sum is £50k less the refurbishment cost - if we assume this is £20k then the taxable amount is £30k which is divisible by the number of beneficiaries, so if there are 2 of you thats £15k each, 3 of you £10k each etc. You are permitted to make £10,100 of capital gains this tax year before you pay tax which thereafter is at a rate of 18% and is payable on January 31 following the end of the relevant tax year that the gain was made. The transaction will need to be reported on each of the beneficiaries tax returns (which they may need to request if not already part of the annual self-assessment regime).

Hope that clarifies the position for you.

David

[orange n blue]

Thanks for the info. I will pass it on.