I am getting myself tied up in knots and can’t see the wood through the trees.
Dad dies leaving estate including property to son and daughter. A few years later, before anything has been done with property i.e. no sale or assent, son dies.
Property now needs to be revalued for date of sons death for IHT purposes, can we still claim 10-15% reduction for joint ownership? My gut feeling is no as property not appropriated to son.
For CGT purposes, I am guessing that CGT payable on the gain of the whole property as no appropriation and no uplift on sons shares.
Am I correct?
QS Rose & Rose
Unless the administration of “Dad’s” estate has been concluded, the son’s estate is entitled to a half share of the unadministered estate, which would include the property, rather than a half share of any of the assets remaining within his father’s estate. No discount for joint ownership would normally be allowed, unless the late father had held it under a tenancy in common at the time of his death.
If the property remained in the father’s unadministered estate, there will be no CGT uplift on the son’s death. If the property is to be sold, consideration could be given to an appropriation by the son’s executors of his right to the unadministered estate to the beneficiaries of the son’s estate, and for the father’s executors to appropriate directly to those beneficiaries. They can offset any potential CGT on a sale using their own personal CGT allowances.
If, however, the father’s estate has been fully administered, and his executors have just not got around to distributing the remaining assets, it could be argued that the son was entitled to a half share of each asset as at the date of his death, in which case a discount for joint ownership could be claimed, and the CGT uplift on death would apply. However, that is a fact specific situation and you may need to persuade HMRC that the estate administration had effectively been completed, barring a distribution of the (remaining) assets at the appropriate rime.