Advice on inheriting a property

indie80

My father passed away in December and I will be inheriting his property. There's only a small mortgage remaining and I'm in the process of getting Nationwide to transfer it to my name. Luckily he was on the 2.5% deal.

I already have my own property which due to the location isn't ideal for getting to work and I intend to move into my late fathers property along with my partner soon.

I understand that when this goes through this will be classed as having a second home? I'm intending on selling my own property once I've done it up a bit but it may take a while to sell. It'll still be furnished so in terms of council tax I think I'd only have to pay 90% on that if it was my second home? I've owned it for 6+ years.

I'm intending on living in my late fathers property for about a year to give me time to sort through all his belongings and do it up a bit for sale.

What I don't quite understand is my position regarding council tax and Capital Gains Tax when I come to sell the properties, obviously I want to avoid having to pay it twice.

I understand that when you own two properties you need to nominate one as your primary residence? And that's the one free of CGT if you've been there for over 3 years. During the week we'd be living at my fathers property to make to commute to London feasible but would not want that as my primary residence for CGT purposes otherwise I'd get stung twice, is that possible?

My own property probably hasn't change much in value since I bought it, it may have even gone down slightly.

Thanks.

CLAPTON

if you move from your current home to your father's home you have 3 years to sell your old home before cgt is an issue
as you will be living in your father's home there will be no cgt when you sell it.


if you stay where you are then cgt is a potential issue when selling your father's home
however, the gain or profit will be based on the selling price less the probate value less any money spent on improvement less selling costs
and of course you have a 10,600 cgt allowance

in the current market one wouldn't expect a large increase in value and make sure you don't underestimate the probate value.

if you genuinely live in both properties then you can nominate one as your primary residence

getmore4less

Get the probate value as high as you can without incuring IHT.

AS has been said CGT only becomes an issue after 3 years.

Thrugelmir

indie80 wrote: »

There's only a small mortgage remaining and I'm in the process of getting Nationwide to transfer it to my name. Luckily he was on the 2.5% deal.

The mortgage won't be transferred into your name at the current terms. You'll need to apply for a new mortgage.

Do you have a mortgage on your own property?

indie80

Thanks all for your replies.

My late father's estate is quite straight forward as I'm the only beneficiary - parents divorced, had no other surviving relatives and I'm not yet married.

CLAPTON wrote:

if you move from your current home to your father's home you have 3 years to sell your old home before cgt is an issue
as you will be living in your father's home there will be no cgt when you sell it.

From what I remember you have to have lived in a property for 3 years to be exempt from CGT, I've lived in my own for nearly 7 years now. So what you're saying is that doesn't apply when you inherit a property after some ones death?

My intention is to get my own property on the market in the next month and move into my father's house the end of this as it's a much bigger house. I have no idea how long it'd take to sell mine as it's just a one bed flat and I had no success when I tried 4 years ago.

I'd then ideally like to sell my father's property in the next year or so to give myself time for a clear out and move somewhere else.

If I did the above would I be liable for CGT or are you allowed to do that?

getmore4less wrote:

Get the probate value as high as you can without incuring IHT.

AS has been said CGT only becomes an issue after 3 years.

I got a valuation done on the property and the difference between the probate value and the estate agent market value was £20k, it needs some work doing to it.

Thrugelmir wrote: »

The mortgage won't be transferred into your name at the current terms. You'll need to apply for a new mortgage.

Do you have a mortgage on your own property?

I've recently completed a transfer of equity form for the Mortgage company and have sent it to their conveyancing team. From what I can tell it will remain under the same terms at 2.5% and I've reduced the payments to make it easier while I've got two mortgages to pay. Potentially I'd like to hold onto that mortgage and transfer it to another property further down the road, but that's a long way ahead yet.

Thanks