Unfair Capital Gains Tax?

blutronica

Hi All,

This is my first post here so forgive me if I sound naive!

My mother has been living in a housing association property for the last 7 years. She divorced my father and he stayed on in our family home.

He was made bankrupt recently so the trustees in bankruptcy have half the house whilst my mother has the rights to the other half.

The trustees in bankruptcy are selling the house and giving my mother her rightful share of the proceeds, but she is now going to be hit with a sizeable CGT bill.

Is there any way around this? She HAD to leave the family home originally because of my Fathers unreasonable behavior and doesn't have much money herself, so now for her to give a chunk to the Taxman pains me! :mad:

All advice would be much appreciated.

Thanks

Blu

Pennywise

Before you get too worked up, have you actually worked out the capital gains tax bill?

Assuming she did live in it for a while, she will get principal private residence relief for the years she lived there and for a further three years. So if, say, she owned her half for 20 years and lived in it for 10 years, 13/20ths of the gain is exempt, leaving only 7/20ths taxable.

She is able to claim indexation relief if she owned it prior to 1998 and then taper relief, both of which will reduce the gain still further.

Then she has her annual CGT exemption of ~£9,000 off the balance.

You may find that she has no tax to pay or very little. You need to do the sums.

blutronica

Thank you so much Pennywise.

She lived in the house from 86 - 94 plus the three years after she left makes it 11 out of 21 years exemption from the CGT plus she is eligible for the indexation relief and taper relief! SO good to know all of this!

Could I ask one more question please? Do we need to find a specialist accountant or can we work out the CGT ourselves?

My mothers share should be £140k

Thanks once again!