Q&As

Are there any issues to be aware of if the executors of an estate appropriate a property subject to a mortgage to a beneficiary before the property is sold in order to be able to offset the beneficiary’s losses against a capital gain arising on the sale?

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Published on LexisPSL on 26/02/2021

The following Wills & Probate Q&A provides comprehensive and up to date legal information covering:

  • Are there any issues to be aware of if the executors of an estate appropriate a property subject to a mortgage to a beneficiary before the property is sold in order to be able to offset the beneficiary’s losses against a capital gain arising on the sale?

Are there any issues to be aware of if the executors of an estate appropriate a property subject to a mortgage to a beneficiary before the property is sold in order to be able to offset the beneficiary’s losses against a capital gain arising on the sale?

It may be preferable for personal representatives (PRs) to transfer or ‘appropriate’ an estate asset to a beneficiary before selling it in order to take advantage of the beneficiary’s lower tax rate, annual exemption or losses. For further guidance, see: Practice Note: Income tax and capital gains tax during administration.

However, it will not always be appropriate for an asset subject to a capital gain to be appropriated to a beneficiary before sale and the PRs will need to consider all the circumstances to assess whether this is appropriate. For example, estate assets may need to be sold to pay debts and expenses if there is insufficient cash within the estate, and conversion to cash may be the only

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