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Selling a property as an Executor? Beware of a few pitfalls

Acting as an executor come with responsibilities, especially when it comes to selling the property of the estate which often is the most valuable asset in the estate.

-The first step is to obtain a best price certificate from the agent or obtain from all the beneficiaries of the estate their agreement to the sale price when this is possible.

-Have you opened an Executors’ bank account? The sale proceeds can only be paid into a bank account in the names of all the executors shown on the Grant of Representation.

-Have you thought of the Capital Gains Tax position? It is often misunderstood that the Executors/the estate is a separate taxpayer from the beneficiaries. If the (net) sale price exceeds the probate value by more than the annual exempt amount of currently £12,300, there will be a taxable gain in the hands of the executors at a rate of 28%. The lower rate of tax of 18% available to individuals is not available for executors.

You could consider: “appropriating” part of the property to the beneficiaries (by signing a Deed of Appropriation), before exchange of contracts, to utilise the beneficiaries’ own exempt amounts (if they have not already used it or do not intend to use it later in the tax year).

The Executors are still the one dealing with the sale but on behalf of the beneficiaries, not the estate. However the executors should retain enough equity in the property to pay any outstanding inheritance tax, liabilities and expenses. It is best to take advice before making a decision.

- The deadline to declare the gain to HMRC is 30 days after completion so it is best to contact an accountant early in the process.

Posted on Fri, July 30 2021