Inheritance?Capital gains Tax

deanolid

Hi everyone,
I have read through other articles on inheritence tax,however none seem to fit my mums and her 2 brothers case.
Wondered if someone could give me some advice or who i need to speak to(IFA?)
My mum and here 2 brothers inherited a the house 10 years ago when their father died(it was worth approx£100,000 then)Their mother stayed living in the house until 2006 when she passed away(she was classed as a tennant because the house wasnt left too her because of the will).
The house is now worth approx £250,000(valued by an estate agent).
Would they have to pay any inheritance or capital gains tax if they decide to sell it?
My mum and one of her brothers already own there own houses.
I am interested in buying part of it as it is 3 plots.Could they sell it to me at a price they choose or does it have to be the valued price

Thanx for listening Deanolid

Musicman

Well from what I know, your mum & her brothers, may have to IHT, if there are additional monies on top of the £250K, which would take your late Grandmothers estate over the IHT threshold. This is due, to the fact, that your Grandmother may of had an interest in possession, depending on how your Grandfathers will dealt with the property bequest.

If this does not apply, your mother and her brothers would be liable for the CGT on the £150K, less any allowances for the lebgth of ownership.

This is a potential minefield and legal advice should be sought, either from a tax adviser, or even HM Customs.

DavidHM

Whilst the grandmother's right to live in the house might have been an interest registrable against the property, it is hard to see how that could have formed part of her estate. Otherwise anything would have passed by will or intestacy and would be clearly part of the estate. Depending on what was in the estate, her estate will be assessed for IHT and calculated on the IHT200. There won't be any Inheritance Tax to pay on anything outside that.

As regards the CGT, your mother and her brothers would be assessed (roughly) as follows:-

1. Disposal value - £250,000
2. Less acquisition cost - (£100,000) --> £150,000
3. Less indexation allowance to 30/03/98 - 4% x £100,000 approx. = (£4,000) --> £146,000
4. Less taper relief - 35% (as not a business asset, held since before March 1998) = £94,900
5. Divided by 3 as they would have held probably as tenants in common = £31,633.33 each
6. Less annual exemption if they have not made any other chargeable disposals = (£8,800 each) --> £22,833.33
7. Multiplied by marginal tax rate of 22% or 40% as appropriate, so between £5,023.33 and £9,133.33 each, splitting the amount if they would be taken over the appropriate income tax thresholds by the chargeable gain.

As the sale is unlikely to take place during this tax year, those numbers will be inaccurate as the rates will change going into the new financial year.

You will have needed a solicitor to apply for the grant (either of probate, if your grandmother had a will, or of letters of administration otherwise) and they will have dealt with the issue of any IHT, at least partially, at that time.

deanolid

Thanx for the info but does my mums brother who doesnt own his own house already still be liable for CGT ?
Anyway if its less than 10,000 for my mum to pay that doesnt seem too bad as i always thought CGT was 40% of any profit....
Thanx again