Tax On The Sale Of A House.

[10ClarionSt]

With the passing of my sister last year, it means my nephew will have to sell her house. There is no will. Before she died, she told him that when sold, the money should be split 3 ways between my nephew, her step son and myself. Would this be subject to inheritance tax or some other kind of tax?

[VHG]

Inheritance tax only kicks in at £325,000, and then you are only taxed on the amount ABOVE £325,000 (at 40%).

Everything below £325,000 is "tax free".

If your sister had a husband who has died and not used his inheritance tax allowance then the amount is double, so £650,000.

[VHG]

Note that as there is no will other relatives COULD claim on the estate, despite what your sister said was her wishes.

This is the problem of NOT having a will.

[Tilly2]

Does your nephew live in the house?

[Tilly2]

Hopefully, it will be pretty straightforward, 10 Clarion.

[bednobs]

hi, have you applied for letters of administration?

[ubasses]

As long as her entire Estate is below the figures quoted by VHG (including any Life Insurance to be paid out) there is no inheritance tax to pay.
There is no Will (and assuming no husband) her natural children are her only legal heirs. If your nephew is the only child it will all pass to him and it will be his decision whether to honour her wishes. Unless she formally adopted the stepson he has no legal claim but could challenge if he was financially dependent on her, neither do you.
If he does pass on any money it will be classed as a Potentially Exempt Gift and there will be no tax to pay as long as he lives 7 years from the date of the gift.
I am assuming his disabilities are physical and he has the mental capacity to make the decisions.
Whoever is going to deal with the Estate will need to apply to the Probate Office for Letters of Administration before the house can be sold or put into his name.

[Canary42]

As there is no Will, what she told your nepwhew is unfortunately irrelevant - the estate will have to be distributed according to the rules of intestacy

https://www.citizensadvice.org.uk/relationships/death-and-wills/who-can-inherit-if-there-is-no-will-the-rules-of-intestacy/

[hc4361]

Which means her son will inherit everything and can then distribute it as he likes.

[Canary42]

True, unless the stepson was also adopted by the deceased.

[Peter Pedant]

10 Clarion
I am sorry for your loss

on the facts you have provided then the nephew under the rules of intestacy will inherit the lot and it is up to him to distribute it as your sister wanted. It seems likely that he will. ( I think it is a semi-secret trust but that is irrelevant as he clearly understand what needs doing )

tax depends on whether to estate is less than £325k ( or 650k if the husbands nil tax band was not used or fully used )
it is likely that it is under

your nephew will almost certainly have to apply for letters of administration if there is a house sale involved

http://www.lawdonut.co.uk/law/personal-law/probate-executors-and-estate-administration/probate-and-estate-administration-faqs

dont goto a lawyer they will want £200 / h for stuff you can do yourself

[Barmaid]

I am going to be pedantic, because that is my role in life.

Everyone is correct on the tax position. Everyone is correct that the nephew cops the lot due to him being only child (assuming no husband).

Stepson does NOT have to show he was dependent in order to claim. A person who was treated as a child of the marriage to which the deceased was a party (ie a step child) has a potential claim under the Inheritance (Provision for Family and Dependants) Act 1975. But it is only potential and would need court action. One day, I promise I shall write an article on this for Ed to publish because it does get trotted out time and time again with slight inaccuracies.

If nephew decided to honour deceased's wishes, do a Deed of Variation which is then not treated as a potentially exempt transfer.

I'd advise nephew to extract Grant of Letters of Administration and

[Barmaid]

I am an idiot

"extract Grant of Letters of Administration" and get on with it. If he feels unable to deal with this, he can appoint you as an Attorney for this purpose and you can extract a Grant for "his use and benefit".

[Peter Pedant]

noo noo you are not an idiot O Greatest one !
we are
thanks for the advice - ( since I might well be the only one to say it )

[Peter Pedant]

.// If nephew decided to honour deceased's wishes, do a Deed of Variation which is then not treated as a potentially exempt transfer. //

Hey thanks about that
I had generally wondered on that point as I consider my own mortality
[ chemo not going that well ]