Reducing CGT on inherited house

TheRealGrumps

Hi
I'm due to inherit a house (value is under the IHT limit) and want to gift it to my children. I'm pretty sure CGT will have to be paid on this gift as it would not be my main home.
However, if I gift 10% per year, then 10% of the current market value would be below the threshold for paying CGT. Is this a valid way of reducing CGT?
Thanks.

anselld

CGT would only be payable on the gain between inheriting and gifting.
It sounds like you are planning to inherit then gift immediately so there will be no gain.

Mojisola

Why not do a deed of variation to the will so that the house passes directly to them?

p00hsticks

anselld wrote: »

CGT would only be payable on the gain between inheriting and gifting.
It sounds like you are planning to inherit then gift immediately so there will be no gain.

Although, assuming that the children don't intend to live in the house, then potentially they'll be liable for CTG when they eventually come to sell it...

anselld

p00hsticks wrote: »

Although, assuming that the children don't intend to live in the house, then potentially they'll be liable for CTG when they eventually come to sell it...

... of course, but that would be unavoidable anyway if that is the case, and only on the gain since probate & gift.

TheRealGrumps

Thanks for the very speedy replies, and on a Sunday evening too!
If the house is passed directly to them when I inherit, when (if) they sell, I assume there will be CGT payable - but only if it's not their main home.
They're currently full-time students paying rent, so this house will be their main home.

If I inherit and sell immediately, I was on the understanding that I'd have a CGT liability based on the sale price as it's not my main home. The gain being the full sale price as the purchase price was effectively £0.

TheRealGrumps

anselld: "only on the gain since probate & gift." How is this calculated?

anselld

TheRealGrumps wrote: »

Thanks for the very speedy replies, and on a Sunday evening too!
If the house is passed directly to them when I inherit, when (if) they sell, I assume there will be CGT payable - but only if it's not their main home.
They're currently full-time students paying rent, so this house will be their main home.

Correct

TheRealGrumps wrote: »

If I inherit and sell immediately, I was on the understanding that I'd have a CGT liability based on the sale price as it's not my main home. The gain being the full sale price as the purchase price was effectively £0.

No. You inherit at the probate value and that is your base cost for CGT.

Mojisola

TheRealGrumps wrote: »

The gain being the full sale price as the purchase price was effectively £0.

It would be on the difference between the value when you inherited and the value when you passed it on to the children.

TheRealGrumps

Oh, ok. So, for example, if the house is valued at £200k when I inherit and I sell immediately for £200k, what CGT liability do I have?

anselld

TheRealGrumps wrote: »

Oh, ok. So, for example, if the house is valued at £200k when I inherit and I sell immediately for £200k, what CGT liability do I have?

200 - 200 = 0

If fact you can deduct sellers fees as well so you can declare a loss to be reclaimed against future capital gains (if you are lucky enough!)