Capital Gains Tax on a 2nd property

WLM21

My father died a few years ago and I was given his house.**

My wife and I moved in and have lived here now for about 4 years.

If I sold the house now, would I have to pay CGT on the value, less my CGT allowance only (as the property is in my name) or the allowance for my wife and me.

I was talking to somebody today about this and he thinks I should get my wife on the property deeds ASAP as only my allowance is included.

Any advice would be appreciated

**
To keep things simple, say house valued at £100,000 and we have lived there exactly 4 years

If I sold today at that figure how much tax would I pay

Pennywise

WLM21 wrote: »

My father died a few years ago and I was given his house.**

My wife and I moved in and have lived here now for about 4 years.

If I sold the house now, would I have to pay CGT on the value, less my CGT allowance only (as the property is in my name) or the allowance for my wife and me.

I was talking to somebody today about this and he thinks I should get my wife on the property deeds ASAP as only my allowance is included.

Any advice would be appreciated

**
To keep things simple, say house valued at £100,000 and we have lived there exactly 4 years

If I sold today at that figure how much tax would I pay

If you've lived there throughout your period of ownership, then there's no CGT as the entire gain is exempt due to main residence relief.

WLM21

Pennywise wrote: »

If you've lived there throughout your period of ownership, then there's no CGT as the entire gain is exempt due to main residence relief.

I actually own another house, which was originally my main house. It was fully paid for, but we decided to rent it out when we moved into my parents' old house.

Does that make any difference ?

We had lived in the other house for about 30 years

BoGoF

What was the probate value of the house?

Any CGT will be based on any increase since you inherited it.

noh

As Pennywise said above there will be no CGT on the house as it has been your main residence throughout your period of ownership.

If you were to sell your other house, the one you left 4 years ago and are now letting out, there could potentially be CGT due on that.

00ec25

BoGoF wrote: »

Any CGT will be based on any increase since you inherited it.

true but irrelevant in this context

OP has stated he has lived in the property as his main home since the date of inheritance. Therefore it is exempt from CGT under private residence relief

On the other hand, the ex main home which is now let, is now no longer exempt, but with 30 years of main residence relief on it and only (so far) 4 years letting, the CGT bill on the ex home may not be too big - impossible to say how much without a lot more background info

WLM21 wrote: »

If I sold today at that figure how much tax would I pay

on the inherited property you would pay no tax at all

WLM21

OP here

Thank you for all your answers

So .. should I get my wife on the property deeds of the house I am in now ?

She's not bothered really ... but is it maybe better in the long run ?

I don't even think she is on the deeds of my 'other house' ... I bought it before I met her. Should I add her name there too ?

00ec25

WLM21 wrote: »

So .. should I get my wife on the property deeds of the house I am in now ?

yes
1. for the purposes of your own death it will make things simpler if she is already a co-owner
(choose between joint tenant or tenant in common - each has their own advantages re inheritance
read: https://www.gov.uk/tax-property-money-shares-you-inherit/joint-property-shares-bank-accounts

2. if ever sold in the future it will be most advantageous for CGT purposes that she is an owner whilst living in it

WLM21 wrote: »

I don't even think she is on the deeds of my 'other house' ... I bought it before I met her. Should I add her name there too ?

categorically NO

she has never lived in it whilst an owner therefore making her an owner now will worsen your overall tax position since whatever % she owns will be liable to CGT without any private residence relief. You tas the person with PRR would therefore lose out because the % of the property you give her won't get the PPR that you would claim if you retained 100% ownership

Whilst transfers between spouses are on a no gain, no loss basis, that does not include her becoming entitled to a claim for PRR on a property she no longer lives in (but once did)

Note carefully - the above is in respect of CGT
If you are looking at letting the property and you and her are on different tax brackets, there may be an advantage against income tax making her an owner if she is on a lower tax bracket than you.
You would need to number crunch to see exactly how much benefit that would be, then you'd need to take a punt on guessing future CGT negative impact. One will outweigh the over over a given timespan (assuming the rules don't change !)

Hpk76

I don't know how this forum works so apologies for hijacking!
My mum inherited a share of my dad's family home in 1979. They both lived there along with his 3 siblings.
My mum moved out into a council house after his death. Always worked. Never claimed benefit. The house has now been sold and she is subject to 18% CGT on her share.
Does anyone know of any caveats whereby you can escape CGT. She has never 'let it out' nor owned her own property.
It seems grossly unfair that the siblings who lived there in a mortgage and rent free home pay no CGT yet she has to pay nearly 12000. Thank you.

sexymax

my ex and myself bought our property 30 years ago. she has not lived in it for over 20 years we are lookin to remove her name from the deeds so that I can get a lifetime mortgage. she has been living in a council property all the time. how is she eligible for capital gains tax ? she will not be profiting from any transaction?

00ec25

Hpk76 wrote: »

I don't know how this forum works so apologies for hijacking!
My mum inherited a share of my dad's family home in 1979. They both lived there along with his 3 siblings.
My mum moved out into a council house after his death. Always worked. Never claimed benefit. The house has now been sold and she is subject to 18% CGT on her share.
Does anyone know of any caveats whereby you can escape CGT. She has never 'let it out' nor owned her own property.

no she cannot "escape" CGT - she is going to make a significant gain on an investment that has cost her nothing to buy - why do you think it would be fair that she gets such a windfall tax free?

I would be flabbergasted if a share of a property acquired in 1979 remains within the 18% tax band when sold in some 2018. I'd expect some of it to be at 28%, unless she is on next to no income at all and her share of the property gain is <£34,500.

the "caveats" are:
a) she is exempt for the time she lived there as her only home and obviously liable once she moved out to the council house.

b) her gain will be based on the 31 March 1982 value, not the 1979 probate value, since the CGT rules were changed to ignore any gain before March 82. So there you go, she has "escaped" 3 years tax free anyway even if she moved out before 1982.

Hpk76 wrote: »

It seems grossly unfair that the siblings who lived there in a mortgage and rent free home pay no CGT yet she has to pay nearly 12000. Thank you.

rather than playing the "it's unfair" card, consider this:

- how much has mother paid towards the (mortgage?) and/or maintenance of the house since 1982? I suspect nothing.

- her choice to live in a council house when she could instead have forced the sale of the property she part owned and used that money to buy her own property. Instead, she denied someone who does not already own a property the use of her council house - many would see that as the "unfair" aspect of her financial affairs