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Sam
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If my parent leaves me a parcel of land in his will, then,

Resolved Question:

If my parent leaves me a parcel of land in his will, then, upon his death, would his estate (or me) be responsible for any capital gains tax? (Assume that the land was purchased by the parent ten years ago and has appreciated in value since then.) And assuming that the estate WOULD be responsible for capital gains tax, would the estate's capital gain tax in respect to that land be affected by the estate's overall tax liabilities (and vice versa)?


 


Also, assume that the parent's estate value far exceeds the inheritance tax limit.

Submitted: 1 year ago.
Category: UK Tax
Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your question

 

No capital gains is not due as Inheritance tax would be considered instead of capital gains tax (The deceased is not charged both Inheritance tax AND capital gains tax) The only capital gains you might need to consider, is if the land increases in value between the time you inherit in and sell it.

Or had the parent sold prior to death (in which case the monies rather than the ;and would have been considered in the Inheritance tax position)

 

Thanks

 

Sam

 

 

 

 

Customer: replied 1 year ago.

So would the estate, in considering inheritance tax, have to take into account the value of the land when the estate is settled; i.e. along with the value of all the other assets of the estate?

Expert:  Sam replied 1 year ago.

Hi

 

Yes they would, as it was deemed to be the parents land up until the date of death so forms part of that parents estate for Inheritance tax purposes.

Of course if this was gifted to you (and ownership transferred to you) prior to death, then please advise, as your question seemed to suggest you had inherited it following the reading of the parents will.


Thanks

 

Sam

Customer: replied 1 year ago.

It's assumed to inherited as per the question.


 


That said, I'm aware that a parent needs to survive for seven years after a gift for it not to be affected by inheritance tax. Correct?

Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your response

 

Then the answer provided is correct, the value of the land at death will have to be included in the estate for Inheritance tax purposes.

 

Gifts are an entire other topic, But I will advise that the individual would have to be alive to make a gift (and consider any Capital gains tax at the time of that gifting) which would create a potentially exempt transfer. Fir it then to be disregarded from the estate for Inheritance tax purposes, the individual would have to survive more than 7 years. If they did not survive more than 7 years, then some/all of the value (depending on how many years have lapsed) are added into the estate for Inheritance tax purposes.

 

Thanks


Sam

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12852
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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