Is it more tax efficient for the estate to sell a house or for the beneficiary?

[LL????]

My wife recently sold a property that she inherited from her mum's estate for which she acted as the executor.

When issuing the contract for sale her solicitor showed the seller as the personal representative of her late mum's estate (ie my wife) as opposed to my wife specifically.

This now looks like additional taxes will need to be paid as the estate will owe CGT on the increase in value of the property and my wife will now owe CAT on the increased value of the estate also, whereas if the contract for sale had been in my wife's name she would have paid CAT on the acquisition value of the property and CGT on the subsequent increase in the property value, thus avoiding a double whammy.

My wife wasn't afforded a choice in who the seller on the contract should have been by her solicitor and we are wondering what options are open to use now to either avoid the incursion of this additional unnecessary extra tax or to seek compensation for the lack of professional advise that should have been forthcoming when the contract was being drawn up.

 

[Brendan Burgess]

My wife wasn't afforded a choice in who the seller on the contract should have been by her solicitor

I am not a solicitor or a tax expert...

So the choice would have been
1) Do you sell it from the estate
or
2) Do you convey it from the estate into your wife's name and then sell it.

It's a very interesting question!

If it had been conveyed to your wife, then she was the owner and therefore the seller.

Are you sure that one is more tax efficient and that she has lost out as a result?

1) The CAT is based on the valuation at the date of death - let's say €600k
2) If the estate sold it for €700k, then the estate would pay CGT on €100k.
2A) If your wife inherited it and sold it for €700k would she not pay CGT on the €100k.

 

[mathepac]

Was the property transferred and registered into your wife's name?

If it was then the solicitor handling the sale has erred. If not, then the "reps of deceased party name" is correct.

 

[Brendan Burgess]

@mathepac

You are correct, but should the question not be? Should the solicitor advise the client that it is better to do it one way or the other?

I have not come across the question before, so my gut feeling is that it doesn't matter from a tax point of view and it's simpler for the estate to sell it as there would be only one set of legal fees.