Some advice needed regarding CGT

maggiesden

Hi
I was wondering if anyone could help me with advice regarding my Brother in law, he and my sister lived in their house for 30+ years sadly, my sister passed away a few months ago leaving him on his own as they didn’t have any children.
Just over twelve months ago my brother in law’s mother passed away leaving him her property in her estate which has now all been finalised.
He is now faced with the decision whether to say in his current house and sell his mother’s property or, sell his house and move into his mother’s property which probably would suit him better as it is a bungalow.
He understands he would have to pay CGT if he sells his mother’s property and it sold for more than what it was valued for at the time of her death.
But doesn't know what is invloved if he decided to sell his own house and move into his mother’s property, can anyone give me any info that he may need to know about CGT or any other factors that may need to be considered.
Thanks in advance

fengirl_2

From what you have said, your brother owned no other property while he lived in his current house. If this is the case, there would be no CGT on the sale of this house.

maggiesden

fengirl wrote: »

From what you have said, your brother owned no other property while he lived in his current house. If this is the case, there would be no CGT on the sale of this house.

he has not owned another property up until now, the deeds were transferred a couple of weeks ago into his name for his mother's property.

zygurat789

maggiesden wrote: »

he has not owned another property up until now, the deeds were transferred a couple of weeks ago into his name for his mother's property.

The "cost" of this house for CGT purposes will be the value it was included in MIL estate, fairly close to the market value when she died.
The price probably won't have increased that much in the last 12 months and the first £10,100 of profit, after selling expenses, is tax free so CGT at 18% shouldn't be an awful lot

John_Pierpoint

I'm losing the plot:

Brother has just legally started owning his mother's former home - he can do with that what ever he wants.

Who now owns this other property and who owned it before brother in law's wife died? (Presumably they were legally married)

I was wondering if anyone could help me with advice regarding my Brother in law, he and my sister lived in their house for 30+ years sadly, my sister passed away a few months ago leaving him on his own as they didn’t have any children.

maggiesden

John_Pierpoint wrote: »

I'm losing the plot:

Brother has just legally started owning his mother's former home - he can do with that what ever he wants.

Who now owns this other property and who owned it before brother in law's wife died? (Presumably they were legally married)

I was wondering if anyone could help me with advice regarding my Brother in law, he and my sister lived in their house for 30+ years sadly, my sister passed away a few months ago leaving him on his own as they didn’t have any children.

The house my brother in law currently lives in was jointly owned by him and my deceased sister and they were legally married, so he owns it now and is still currently living in it, but he has also now inherited his mothers bungalow as well. He thinks now as he is on his own it would make sense to sell his house that he has owned for 30 years and move into the inherited bungalow.

If he did this would he have to pay any CGT or is there any other things to consider (different kind of tax to pay) as he would be now selling his own home.

John_Pierpoint

I've got it :
BiL lives in a house, his principal private residence.
He has now inherited a bungalow at its probate valuation.
Which one should he sell?

He can sell the house without risking any tax charge.
He probably can sell the bungalow without a tax liability - it might even have a loss than can be carried forward (**).
(Have a look at a web site such as "Zoopla" to see if prices locally are moving)

Obviously there are a multitude of other factors that could be taken into account, including renting out one or other of the properties.

(**) I had a similar situation with my late mother's house (No IHT liability) so we simply switched it into the names of brother and sister. That cost 100 GBP (approx some 6 years ago) so we could sell it saying we were the owners without getting tied up in questions about probate in the minds of the buyers.

Still had to fill in the CGT pages in our tax returns, even though there was no tax to pay. Depending on how long after the death - you may be able to substitute the actual sale price for the probate value but I'm not up to date on the rules for "excepted estates" (ie the majority that don't pay IHT.) CGT allows the benefit of deducting the costs of sale from the disposal value.

nikki1520

or he could move into mum's and rent his out for up to three years, then sell it before incurring any CGT Liability- may be helpful depending on whether the market locally is buoyant or not?