Probate value is not the final word. What executors actually sell for can change the tax bill in either direction.
- If executors sell land or buildings within four years of death for less than probate value, they can claim inheritance tax back on form IHT38.
- All land sales in the period count — a gain on one property reduces the relief on another — and buying other property can wipe it out.
- Quoted shares and unit trusts sold at a loss within 12 months can qualify on form IHT35.
- If property sells for more than probate value, the gain is taxed on the estate at 24%, with a £3,000 annual exempt amount for the year of death and two years after.
- UK residential property gains must be reported within 60 days of completion.
The lesson for property investors: proper RICS valuations, good records and a plan for the timing of sales.
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Six short reads each week on tax, Wills, family wealth and running a business, from John Ireland. Since 1996, three decades of protecting families.