Renting out inherited property

dave76

My sister and I recently inherited a property which is now on the market to be sold. We originally dismissed renting it out but were talking about it again recently and not totally sure what the tax implications are if we kept hold of it.

With 50% joint ownership I assume rental income and thus tax liabilities are equally split - does it just go on top of your normal employment earnings at the end of the tax year and you pay tax at your "normal" rate? Is there any way to use a spouses lower tax band?

If we kept it and sold in a few years I think we may be liable for capital gains tax - but with joint ownership I assume each owner gets the full CGT allowance and the property would have to effectively go up by about 22k (at todays rates) before any CGT was payable?

Guest101

Correct all round.

You cant use your spouses lower limit.

Bluebirdman_of_Alcathays

You also get the final 18 months of ownership as PRR, plus letting relief for the period it was let.


It would have to appreciate significantly in value for you to pay CGT.

booksurr

Bluebirdman_of_Alcathays wrote: »

You also get the final 18 months of ownership as PRR, plus letting relief for the period it was let.
It would have to appreciate significantly in value for you to pay CGT.

as the OP has not clarified where either he or sister have lived since the date of the inheritance that statement would apply ONLY to the person who has lived in it as their main home after inheritance and before it is sold

also on a technicality re rental income split, the only time when the split must equal the respective ownership shares is where the owners are married to each other. As brother and sister you are free to split the income in any proportion you want, does not have to be 50/50, although obviously any variation from that would be "unfair" to the lesser party.

Mr_8o8

Any expenses such as agency fee's, insurance's or even a replacement toilet seat would be tax deductible. find yourself an account