Tax costs of selling inherited house ?

Jon_01

Anyone give me a pointer here… I’ve read the info on some websites but I’m unsure how this works !

I’ve just inherited my parent’s house, total value well under the inheritance tax threshold of 265k.

I’ve owned half of it for 5 years as my father left me his half when he passed away and he and my mother held it as tenants in common.

We’ve selling it (purely by chance) at the same amount as the probate value, so I understand that they’ll be no capital gains tax ?

From what I’ve read I think I have to ignore half the value (as I’ve owned it for a while), but I’m not sure how the other half works for tax ?

Probate was granted mid Jan this year and I’m the only beneficiary.

Total selling price is going to £113,000, less fee’s of £3,000ish, so £110,000.

So, do I just declare £55,000 ? if so, dose that means I lose 40% to tax !!
Are there any ‘work rounds’ ?

Any sites any where with more info on this ?

Debt_Free_Chick

The half you've just inherited can be ignored, but you have a potential CGT liability to the half you inherited five years ago. However, you have some reliefs that can be deducted from that £55k.

Hang around as one of the MSE members is pretty clued up on CGT & property.

silvercar

You need to look at the increase in value from when you inherited it to when you sell it. So for the half you recently inherited there is no increase, for the half you inherited 5 years ago there could be some increase.

As you have owned the half property for 5 years, there is a 15% reduction in the CGT liability. You also have a personal CGT allowance of £8,800.

Say it was worth £80,000 5 years ago. The half you then inherited was £40,000 which is now worth £55,000. So a gain of £15,000. less 15% for 5 years ownership = £12,750, less CGT allowance of £8,800 = £3,950. At 40% tax this would be £1,580.

I don't know if there are further allowances due to the fact that you inhertied the half but (presumably) it was occupied and therefore unavailable to you.

Jon_01

Yes, when I inhertied from my father there a item in the will saying that while my mother was still alive and wanted to live there it's could not be sold (not that I would).
She passed away in Nov last year and as it's so far away (we live in Bristol and the house is in Leicester) the only option is to sell it...

saintalan

Forgive me hi-jacking the thread, just wanted to check with CGT could become liable when a joint owner (not spouse) as opposed to Tenant-in-Common inherits the whole property.

Just to clarify the joint ownership was started 20 years ago but not resident for 9 years within that period. (but is now!)

Thanks, Alan

Gorgeous_George

OP, I think you can transfer the house into joint names if you are married thereby doubling your CGT allowance (you and Mrs OP have £8,800 allowances).



GG