BEQUEATHING A HOUSE
THE more people talk about their estate, the easier the transition and the less the emotional heartache.
There is nothing worse than a close family being torn apart by siblings bickering about a parent’s estate.
If your will says your home should be sold and the money distributed to your loved ones, be wary of Capital Gains Tax. While you may be well beyond the reach of the taxman, your property isn’t.
If the trustee sells the home, your estate will be subject to capital gains tax on the profit. This is worked out as the difference between the price at which you bought the property and the sale price or the price for which the trustee sells it.
If, on the other hand, the actual property is passed on to your remaining relatives (not the amount of cash gained from the sale) and they choose to sell it, the capital gains tax is calculated differently.
In this case, it is payable on the difference between the property valuation at the time of death and the price they receive when they sell the home.
Bear in mind this is only applicable to houses bought after the introduction of the Capital Gains Tax in September 1985. So any houses bought before this period are exempt.
If you are making a will and your property falls within the capital gains tax net, it may be worth seeking some professional advice as to the most tax-effective method of disposal.