Capital Gains Tax

kimpowell

I seriously need some advise. When my mother died 17 years ago she left her house in trust to my step father for his life and then in trust for myself and brother. The house was valued then at 40,000.

My step father is now giving the house to us on his 65 birthday rather than us inheriting it when he dies and we have been told that we will now have to pay capital gains tax.

Does anybody know if we pay the difference in the price of the house which is now valued at 100,000 or pay on the whole 100,000.

I am so confused by it all. Also when would we have to pay the tax, we plan to sell the house, so do we pay the tax then or do we pay when we are given the house.

Please help anyone.

Bermuda_John

Capital Gains Tax on a home you give away

As long as the home you give away is your main home, Capital Gains Tax won't be payable.
However, if you give away a second home, Capital Gains Tax may be payable if the property has increased in value between when you first owned it and when you gave it away.
The person you give the home to may also have to pay Capital Gains Tax if they make a profit when they sell, give away or exchange - 'dispose of' - the home, unless it's their main home.
Read more about Capital Gains Tax relief on your own home

kimpowell

So, when my brother and I are given the house at Christmas, we will not have to pay capital gains tax until we sell the property, is that right.

When my mum died the house was valued at 40K it is probably about 100k now, would be pay tax on 100k or the difference of 60K.

Sorry about all the questions but tax always goes over my head.

Thanks.

Bermuda_John

no tax to pay. until you sell

if you were to sell it then it would be 40% of the difference less some allowances

thats where all these proprty people fail. they remortgage and remortgage.

have £1mill proprty portfolio 800k motgage .... sell the lot and owe 300k tax!!!!!! so they have lost 100k effectively

mrkbrrws

Bermuda_John wrote: »

if you were to sell it then it would be 40% of the difference less some allowances

Capital Gains Tax is at the rate of 18%.

Mary_Hartnell

Can I go back to first principles:

My step father is now giving the house to us on his 65 birthday rather than us inheriting it when he dies and we have been told that we will now have to pay capital gains tax.

Why is generous step father doing this for you let us say 20 years early?

Where does he intend to live for the next 20 years?

What other assets does he enjoy?

Presumably you mean that you and other sibling will be absolute owners, presumably as tenants in common (assuming we are talking about "south of the border") ?
There isn't some other trust involved for perhaps yet another generation?