Capital Gains Tax on family home

ceeforcat

cte1111 wrote: »

Also, he will be able to apply taper relief, which means that if he owned the property for more than 2 years, then he will only have to pay CGT on a certain percentage of the profit. For 7 years (for example), the % chargeable would be 75%.

So if the total gain was £40k, after taper relief the gain would be 75% of that, i.e. £30k.

quote]

'Fraid not - Taper relief abolished for disposals made after 6th April 2008.

Then he could take off the annual exemption of £8,900, leaving £21,100 taxable. If your uncle is a higher rate tax payer, then the CGT will be 40% of that, i.e. £8440.

Flat rate of 18% after 6th April 2008

So in real terms then the CGT may not hit us by as much as first thought, as i guess lets say it was worth £80k when transfered and sells for £120k then its only the £40k less selling costs and cgt annual allowance that tax is payable on. Is the tax rate 18% as i got quite confused as some of it mentioned 18% flat rate

Absolutely correct.

CLAPTON

just to add
the CGT allowance for this year is 9600
so in your example of 40k you would pay
18% on (40,000 - 9,600) = 5472
or if you transfer half the house to your wife you jointly would pay
18% on (40,000 - 2x9,600) = 3744


However, the HMRC may object to the acquisition value of the house.
Presumably the house was transferred on the basis that your gran continued to live there... so clearly the value of the transferrred asset was lower than the free market value of the house.

high-tower_2

CLAPTON wrote: »

just to add
the CGT allowance for this year is 9600
so in your example of 40k you would pay
18% on (40,000 - 9,600) = 5472
or if you transfer half the house to your wife you jointly would pay
18% on (40,000 - 2x9,600) = 3744


However, the HMRC may object to the acquisition value of the house.
Presumably the house was transferred on the basis that your gran continued to live there... so clearly the value of the transferrred asset was lower than the free market value of the house.

Yeah my Gran continued to live there untill she went into hospital a week before christmas.
Would we be able to take the sales fee's off (hips, estate agents, solicitors etc) the example of 40k?

It now does not seem too bad after getting some info from you guys, i shall relay it to my uncle so he does not worry about it too much while he makes all the other arrangements for funeral etc as it must have been on his mind quite a bit for him to mention it on saturday (day she passed away).

Thanks

CLAPTON

yes, he can deduct all the selling costs from the 40k (or whatever).