Capital Gain Tax Advice
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trevorl1
Posts: 1 Newbie
in Cutting tax
My family owns a piece of property which we are looking to sell in the future, however our situation seems rather unique.
The property is currently owned by my grandfather and was purchased back in the early 60's. We are tracking down the original cost of purchase as well as tax documents over the years for tax write-offs.
Our concern is if we are better off selling the property while my grandfather is still alive in order to avoid as much taxation on the sale, which is a request from him.
He falls in the 15% tax bracket and is 88 years old. We know that there will be a tax break due to him being in the 15% tax bracket, however we are unsure if there are any other opportunities to get tax breaks on the capital gain tax.
Let's say that he paid $200,000 for the property back in 1960 and the sale of the land now would yield a price of $1 million, after realtor and misc. sale fees.
Is there any way to avoid additional gains being taxed?
If we waited until the property was inherited to sell, would we be at risk for owing more taxes at the time of inheritance and at the time of sale?
The property is currently owned by my grandfather and was purchased back in the early 60's. We are tracking down the original cost of purchase as well as tax documents over the years for tax write-offs.
Our concern is if we are better off selling the property while my grandfather is still alive in order to avoid as much taxation on the sale, which is a request from him.
He falls in the 15% tax bracket and is 88 years old. We know that there will be a tax break due to him being in the 15% tax bracket, however we are unsure if there are any other opportunities to get tax breaks on the capital gain tax.
Let's say that he paid $200,000 for the property back in 1960 and the sale of the land now would yield a price of $1 million, after realtor and misc. sale fees.
Is there any way to avoid additional gains being taxed?
If we waited until the property was inherited to sell, would we be at risk for owing more taxes at the time of inheritance and at the time of sale?
0
Comments
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Don't bother with anything spent before 31 March 1982. If the property is sold before he becomes a corpse then the value on that date is the base cost.The property is currently owned by my grandfather and was purchased back in the early 60's. We are tracking down the original cost of purchase as well as tax documents over the years for tax write-offs.0 -
This question is written in American English. Is the question about UK tax or US tax, or both?0
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irrelevantWayne_O_Mac wrote: »Don't bother with anything spent before 31 March 1982. If the property is sold before he becomes a corpse then the value on that date is the base cost.
OP is American and is asking about tax liability in America (we don't have 15% tax rates in the UK, they do though: https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States )
OP this is a UK website, you need an American tax advice site0 -
I bought my Mum and Dads house in 1988 for £8000 and put in new windows for £2000. I lived in it until 1994, me and my partner got a joint mortgage to buy another property. My parents lived in this house rent free until they both passed away in 2008. In 2010 I rented out the property until August 2014 this was declared to the tax as an income. Due to circumstances I moved back in in September 2014 until April 2015 when I decided to sell. I sold it for £118,00 can you advise if I have to pay CGT. Thanks0
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you most certainly will have to pay CGTDarcey2013 wrote: »I bought my Mum and Dads house in 1988 for £8000 and put in new windows for £2000. I lived in it until 1994, me and my partner got a joint mortgage to buy another property. My parents lived in this house rent free until they both passed away in 2008. In 2010 I rented out the property until August 2014 this was declared to the tax as an income. Due to circumstances I moved back in in September 2014 until April 2015 when I decided to sell. I sold it for £118,00 can you advise if I have to pay CGT. Thanks
you have a gross gain of 118 - 8 = 110,000 and owned it for 27 years
the windows are regarded as revenue not capital costs and are disallowed
you would be able to deduct legal fees of buying and selling and Estate Agent fees when selling (if you have receipts to support the amounts)
the real calculation should be in months (or days) not years, but as an example...
private residence relief 1988-94 = 6 years + final 1.5 years (18 months) = 7.5/27 x 110,000 = 30,556
letting relief period 2010 - (april 15 - final 18 months = Nov 13) = approx 3 years so 3/27 x 110,000 = 12,222
net taxable gain 110,000 - 30,556 - 12,222 - (personal allowance) 11,100 = 56,122
you will be taxed on a figure of around £56,000 of gain some of which will be at 18% (if you have any basic rate tax band remaining) and the rest (majority?) will be at 28%0 -
Hi there
I'm hoping someone may be able to help me. Sorry if this isn't posted in the correct place, as it is my first attempt!
I purchased a right to buy property from the council with my mum and dad in 2005. I lived in the property with my parents until 2014. My father then died in 2015 and currently the house is to be sold by my mum as she is moving to another area of the country. Would I be liable for any part of this process? The house is registered with the land registry in all three names, and the mortgage was also in all three names (although essentially the payments came out of my bank account, up until the balance was cleared several years ago).
Any ideas/advice would be greatly appreciated.0
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