Tax - capital gains, income or inheritance?

[Twiglet2015]

If a property years ago was brought with the intention of renovating and selling but instead was let out after renovations. The property is then left to someone in the will. What tax will be paid once the original owner passes away.

I'm not a lawyer or an acountant (so I'm free ) but this sounds very odd to me.

Why doesn't your mother take less dividends from the company so that she stays within the basic rate for tax ?

And how can the company be making so much from one very old property ? ( unless it's a block of flats in London )

And I thought that shares in a company like this were completely free of IHT under Business Property relief ?

Is it a limited company or is your mother operating as a sole trader ?

You and me both. This really doesn't make sense.

If I was you I would find another tax qualified accountant and ask their opinion. They might not charge for an initial interview, only if it leads to something.

There's a limit to what I can do via the medium of MN!

Rental income on her tax return as self-employed income? Very unusual, and sounds incorrect. If a company owns the property then it should definitely not go on her personal return as self-employed income.

KristinaM - shares in property holding companies do not qualify for business property relief in IHT.

If I were you I would start with the solicitor (and also pay the £3-4 to check land registry) asking how the property can be left to you if it is held in a company? If it is indeed held within a company then he has not written the will in accordance with her wishes and presumably would have to sort that out? good luck

Thank you Riksti. I'm guessing that means the mother wouldnt get entrepreneurs relief either, if she sold the company ?

Surely if the income is classified at " self emplyment " it means that the mother is a sole trader ? Otherwise it would be dividends from shares ?

That's might explain why she's paying so much tax

Kristina I don't know the answer to your question. If the property has her name on the title deeds then am I safe?

If your mum's name is on the title deeds then she owns it and can leave it to whom she wants....

I'm surprised the solicitor showed you the will at all, especially as you have POA, unless your mother instructed him/her to do so.

Twig let -if you don't know if you are administering a limted company or on behalf of a sole trader then you need some better professional advice

No one on here can say that you are " safe "

And if your accountant can't tell you which one it is then you REALLY need a new accountant

Yy to that Kristina.

It may be that your DF left your DM a "business" rather than a "company" and as such she is the sole owner.

Check Land Registry.

It can be that company owns the property but your DM has the absolute right to the rental income - which would mean it would appear on her tax return, but that would be a very odd way to do it and would involve some legal work that would just be... well very strange. But you never know.

Do you have the company accounts? What does it show under capital?

These are very simple issues.

1. Do a £3 Land Registry search on that property (and any other properties) on line today and tell us exactly who is the owner. It all sounds as if there is no limited company registered at Companise House and that this house is owned in your mother's personal name but that may not be right.
2. It is possible this property is owned by your mother personally which you may inherit and there is a limited company left to your brother which has other properties or income. Your sister gets the house she lives in.

1. If there is a limited company registered at Companies House you can do a very cheap search to obtain details of it and its accounts again today on line at companieshouse.gov.uk to look into that company.

1. If your mother dies then if her estate - any properties she owns, her company if there is a limited company etc, the house your sister currently lives in is all added together to see if she is over the inheritance tax limit. If she is not over that limit then there is no IHT.

1. Pity your mother has not sent you all her will. Our father posted us all photocopies so we knew exactly what was said in it.