Property inheritance and sale with current tenant

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    Property inheritance and sale with current tenant

    Having finally inherited our late mother's house (legal shenanigans took over 6 years!), we are on the verge of completing a sale. The buyers are happy to take on the long-standing tenant so that's a bonus for us. However, I want to ensure that our mother's estate has no liabilities in regard to the tenancy.

    Firstly, how can we ensure that the AST that the tenant signed with our late mother and has gone periodic is formally ended? Will a deed of surrender suffice?

    Secondly, there is a deposit held by TDS in the name of our mother. How can I get that released back to the tenant? I can't find anything on the TDS website in relation to that and wonder if anyone here has ever dealt with that before.

    #2
    You don't want to end the tenancy if the buyers are taking it on. You want to transfer it to them. Instruct your solicitor to ensure that a s48/s3 notice of change of landlord is served as the final act of the purchase. The new owners then step into the shoes of the old landlord. Likewise you will need to arrange for the deposit to be transferred to the new owners. They will need to open an account with one of the deposit schemes first. Your liabilities should then end.

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      #3
      thanks DPT47. Just fired off an email to the solicitor. I'm talking to the agent re the deposit scheme. They were our agents both for letting and the sale so they're keeping it all in house. Hopefully that will make things like this simpler.

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        #4
        Long-standing tenant? When did he 1st move in please?
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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          #5
          still awaiting paperwork to show tenancy has ended and deposit dealt with from agent. Watch this space.

          In the meantime, the property has sold and I'm in the process of deciding what CGT has to be paid on the cash my sister and I have split. I was doing pretty well with the online form until I ran into this

          What date did you get the property?
          This is the date the property was transferred into your name.
          This has puzzled me because the property was never transferred into our names. It was sold by the estate and we have received the cash from the sale as legatees. Reading through some notes on gov.uk, I came across this interesting paragraph

          During the period of administration, the personal representatives may be liable to CGT if they sell or otherwise dispose of any of the assets in the estate. This does not apply when assets are passed to legatees under the terms of the will, and so on.
          Does this mean the estate is liable for the CGT bill and not my sister and I as legatees?

          If not, how on earth do I answer the question in the online CGT form?

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            #6
            This might do better on the tax forum here: https://forums.landlordzone.co.uk/forum/tax-questions

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              #7
              You need some proper tax advice.

              As far as I understand it, for tax purposes, the property is treated as being passed to you when your mother died - even if it wasn't.

              So, there are two CGT calculations, one for your mother's estate which treats the property as passing to you on the date she died, and one to the legatees based on any increase in value between the date of death and the date of sale.

              It doesn't come up often, because most people don't die owning a property where CGT applies, so I'm not that certain about the position of the estate, but I'm reasonably sure about the position of the legatees.
              Normally it's trivial, because the period of ownership is usually quite short, but in this case, maybe not.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                thanks for that.

                for tax purposes, the property is treated as being passed to you when your mother died - even if it wasn't.
                I thought the same... until I saw that part of the form and the footnote referring to the date of transfer as opposed to, for example, the date of death. THe property has increased in value about £60K since our mum's death so we'll each have about £30K of capital gain to deal with.

                My rental properties provide us with only enough net income to use up our personal allowances each year (i.e. about £20K) and fostering is our main job which has its own tax breaks and there we don't usually pay any tax. Because of this, I'm not sure where we stand when it comes to being able to soak up this capital gain and I've never had a capital gain to deal with before in my life.

                I don't even know, for example, if there's a separate CGT allowance from your own personal allowance or whether if I do pay CGT, I pay it at 18% or 28%. Assuming I can only use my normal personal income allowance and it's the 28% rate then I'm looking at a £9K bill even though I would have sold the property immediately after she died in early 2015. It was only because of bad legal advice that it took nearly 7 years to get to this point, in which time the property appreciated considerably.

                Anyway....

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                  #9
                  CGT allowance I believe is a separate allowance and is currently £12,300.

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                    #10
                    ah great... well that would cover it then I assume. Been hard to find details of CGT allowance v normal allowance online.

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                      #11
                      You calculate CGT based on your estimate of income plus gain, and it’s adjusted when you complete an annual tax return next tax year.
                      Its a complete pain for people who don’t normally complete self assessment returns.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment

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