CGT on house

slinga

This question comes about from reading another thread.

When my father died, the final parent, 12 years ago he left the house jointly to my brother and me.
I bought my brother's share after a rough estimate of the value from a cousin who is an estate agent, nothing in writing.

It is the only property I own.

Please confirm that if I sold it there would be no CGT to pay.

I believed there wouldn't be but the other thread has made me think again.

CLAPTON

when did you buy the house from your brother?
do you live in the house?... if so have you lived there since your father died?

slinga

CLAPTON wrote: »

when did you buy the house from your brother?
do you live in the house?... if so have you lived there since your father died?

11.5 years ago.
Yes we now live there.

No moved there two years after he died.
We were previously living outside the UK.

CLAPTON

basically you are exempt from CGT for the period in which the property was your principal private residence (i.e. you actually lived there)
otherwise you potentially need to pay CGT

the gross gain is the difference between the buying or acquisition price (presumably the probate value here) and the selling price less buying and selling costs.

the exempt part is worked out by working out the proportion of the time (in months that you actually lived there plus the last three years
So you might be liable for the period from when acquiring the property until you moved in there.

you also have a CGT allowance of £10,100 to set against the gain.

Murdina

By the way, when your brother sold you his share he was liable to CGT based on the market value of the property at the time possibly less a discount of around 10% to take account of the fact that a half share in a property is less marketable (who wants half a house)?

If he lived there then the PPR rules apply to him in same way as for you & any gain would be covered by the exemption.

HMRC generally do not go back beyond 6 years in the 1st instance but I am just slightly concerned that when you do sell & if they asked some questions this issue would come to light so be ready with the answer.

slinga

Murdina wrote: »

By the way, when your brother sold you his share he was liable to CGT based on the market value of the property at the time possibly less a discount of around 10% to take account of the fact that a half share in a property is less marketable (who wants half a house)?

If he lived there then the PPR rules apply to him in same way as for you & any gain would be covered by the exemption.

HMRC generally do not go back beyond 6 years in the 1st instance but I am just slightly concerned that when you do sell & if they asked some questions this issue would come to light so be ready with the answer.

Very interesting.
Thanks for highlighting that.

So if I bought his half share for say 100k and he didn't have any other CGs for that year then he would be liable to [(100X0.9) - 7.5] X.18 = 14.85k assuming 7.5k was the allownce that year.
But he may have lived in the property for a qualifying period which was 6 months????????

Or I might have paid for the property over a number of years??????????

Allegedly

Mind you we have no intention of selling the house until I croak.:o:eek:

noh

No.
CGT is charged on the gain made.
It was acquired it at the probate value and sold to you for say £100k.
CGT is calculated on the difference between those two figures.

It's very unlikely that there is any CGT due from your Brother.