Tax on selling inherited property

aarong1985

A friend of mine inherited his mother's buy-to-let house about 2 years ago, at the time it was being rented out to a tenant who stayed there for a little while after she died, my friend took over ownership/landlord responsibilities.

He decided a little while later that he wanted to cash-in so gave the tenants notice and put the place up for sale and in sold September 2014 for just under £160,000. There was no outstanding mortgage on the property. Because of the short time between him inheriting the property and it being sold the difference, less selling costs, would fall comfortably in his CGT allowance.

However this was September last year and although he keeps reiterating his intention to he hasn't yet reinvested the money back into another property to develop and sell on and he has had the cash sat in his personal account all this time and has been using it as income, taking holidays, paying bills, buying food, going on nights out, yet I'm 99% sure he hasn't declared it as income and hasn't paid a penny of tax on it at all.

Am I wrong to be concerned for him that soon HMRC could come knocking to demand why all this income wasn't declared and demand £65,000 in unpaid Income Tax and NI?

[Deleted User]

aarong1985 wrote: »

A friend of mine inherited his mother's buy-to-let house about 2 years ago, at the time it was being rented out to a tenant who stayed there for a little while after she died, my friend took over ownership/landlord responsibilities.

He decided a little while later that he wanted to cash-in so gave the tenants notice and put the place up for sale and in sold September 2014 for just under £160,000. There was no outstanding mortgage on the property. Because of the short time between him inheriting the property and it being sold the difference, less selling costs, would fall comfortably in his CGT allowance.

However this was September last year and although he keeps reiterating his intention to he hasn't yet reinvested the money back into another property to develop and sell on and he has had the cash sat in his personal account all this time and has been using it as income, taking holidays, paying bills, buying food, going on nights out, yet I'm 99% sure he hasn't declared it as income and hasn't paid a penny of tax on it at all.

Am I wrong to be concerned for him that soon HMRC could come knocking to demand why all this income wasn't declared and demand £65,000 in unpaid Income Tax and NI?

Op - I think that your concerns can be answered by the last few words of your second paragraph. If this is correct why would HMRC come looking?