Do i pay capital gains tax or inheritance tax?

slouiseb

My mum and dad souly brought a house over 20 years ago. Only my mums name is on the house though as ownership.
My mum, dad and myself use to live in the property.
My grandad had his name put on the house about 15 years, but has never lived in the house.
Just over a year ago my grandad took his name off the house and i had my name put on it.
My grandad then died early this year.
The house is currently up for sale and once sold i'd like to know prior to any sale of the house whether or not i'll have to pay any capital gains or inheritance tax at all please?

Fire_Fox

http://www.hmrc.gov.uk/cgt/
http://www.hmrc.gov.uk/inheritancetax/

slouiseb

ive read those pages but dont quite understand

cte1111

Who is going to get the proceeds of the house sale? If it is just your Mum, then there will be no tax to pay as it sounds as if she has lived there throughout the period of ownership.

slouiseb

my mum moved out 13 years ago and ive lived here souly the last 7 years with my husband and kids. the money from the sale of the house would go to buying another house to house me , hubby kids and my mum and dad altogether.

Fire_Fox

You need to appoint a conveyancer to act for you in any sale, appoint them now and ask them these questions.

slouiseb

ive got one with the estate agent that the house is on the market with.

googler

Beneficiaries don't pay Inheritance Tax; executors pay it when settling the affairs of the deceased.

Since you don't seem to be inheriting the house (your 'name was put on it'), then unless your Grandfather died with over £300k or so of other assets, no IHT will be payable.

Is the house on the market because of a term in the deceased's will?

00ec25

with respect you have presented rather a confusing picture of who owns it and untangling this is critical to providing an accurate answer

20 years ago your mother purchased it as the sole owner - your father never had a share of it? Did mother and father live in this house until they moved out - if father owned another property in his own name then mother potentially was not exempt from CGT as a married couple can only have one "main" home exempt, so it depends where they lived as a couple.

15 years ago your grandfather became an owner - was that joint with your mother or did he become the sole owner instead of mother? Did he pay your mother any money, or get added to the mortgage or was it simply gifted to him?

13 years ago your mother moved out - was the property then empty or was it let out or did grandfather use it as his second home?

7 years ago you moved in whilst it was still owned by grandfather.

Grandfather never lived there, so as (part?) owner he was liable for capital gains tax whilst still alive.

1 year ago ownership transferred from grandfather to you - again did money or mortgage change hands or was it a gift? At that point grandfather was still alive and therefore he had made a "CGT disposal" to a relation (under the "connected person" rule) and so CGT would be payable at that point in time since it was not and never had been his main home - was CGT paid?

You have been living in it as your main home for as long as you have been a formal owner, therefore you yourself are exempt from CGT when you sell it but it is far from clear if your grandafther's estate has accounted for its tax liabilities - grandfather was liable to CGT, if none was paid then his estate certainly owes it .

as far as IHT is concerned then as he "gave up" ownership of the house before his death this forms a potentially exempt transfer (PET). Under a PET the gift (if it was gifted to you) is exempt from IHT after 7 years. However, GF died after 1, therefore the value of the property remains , in full, within his estate and so may be subject to IHT if his estate is , as googler says, above the IHT threshold of £325,000.
There is also the question of what happened to grandmother? If GM died before GF then some of her allowance may still be available as part of GF's total

to provide an accurate answer you need to provide more info !!!

gfplux

As you will be using a solicited to sell the house (and buy the new one) ask the questions of them.