Inheritance tax or capital gain tax

Vickimabb

My husband and his brother brought their parents house from them around 30 years ago so their parents could retire mortgage free. The house was purchased below market value. Both parents have since died and neither brother lived in the house since the purchase, their younger brother lived there as a carer and he is still there rent free. If we sell the house is there a way to pay inheritance tax rather than capital gains tax? If they had not brought the house it would be inherited.

getmore4less

May be a need to assess both.

Gift with reservation and pre owed asset come into play.

00ec25

where did they bring the house to? Have they hidden it effectively?

On the assumption it is in plain sight and they instead bought the property, they are each liable to Capital Gains Tax only on their respective shares.

The gain will be calculated on the difference between what the property was worth 30 years ago on the open market (not the discounted price they paid for it) and what it sells for now. They and their parents are "connected persons" hence the open market rule.

To get a valuation from 30 years ago which would survive HMRC scrutiny they may need to get a professional valuer to do it for them, eg: a RICS valuer or they can submit their calculation on a CG34, and let HMRC tell them what it values the property at and thus adjusts their CGT accordingly
https://www.gov.uk/government/publications/sav-post-transaction-valuation-checks-for-capital-gains-cg34

That said, as they bought the property at a discount, and parents continued to live in it until death, the discount is classed as a gift. The value of the gift formed part of the parents estate when each died. I wonder if anyone who knew what they were doing dealt with the respective parent's estates for probate purposes?

00ec25

getmore4less wrote: »

Gift with reservation and pre owed asset come into play.

it would be a GWR, not a POAT

AdrianC

The parents sold the house 30 years ago, and have presumably spent the money they received for it... and you want to count it as part of their estate now for IHT?

Cake. Have. Eat.

Cheeky_Monkey

Vickimabb wrote: »

My husband and his brother brought their parents house from them around 30 years ago so their parents could retire mortgage free. The house was purchased below market value. Both parents have since died and neither brother lived in the house since the purchase, their younger brother lived there as a carer and he is still there rent free. If we sell the house is there a way to pay inheritance tax rather than capital gains tax? If they had not brought the house it would be inherited.

But they did so it couldn't be. You can't inherit something you already own.

G_M

Vickimabb wrote: »

My husband and his brother [STRIKE]brought[/STRIKE]bought? their parents house from them around 30 years ago So hubby and bro became the owners .......

The house was purchased below market value.

Both parents have since died and neither brother lived in the house since the purchase,so neither owner used the property as their main residence. They donot qualify for Private Residence Relief on CGT.

their younger brother lived there as a carer and he is still there rent free. irrelevant

If we sell the house 'we'? Only the owners, hubby and bro, can sell

is there a way to pay inheritance tax rather than capital gains tax?
of course not - they did not inherit

If they had not [STRIKE]brought[/STRIKE]bought the house it would be inherited.

If I had not not accepted my last job offer, I would not have to pay income tax. Can I pretend that this is what happened please?

antrobus

Vickimabb wrote: »

My husband and his brother brought their parents house from them around 30 years ago so their parents could retire mortgage free. The house was purchased below market value. Both parents have since died and neither brother lived in the house since the purchase, their younger brother lived there as a carer and he is still there rent free. If we sell the house is there a way to pay inheritance tax rather than capital gains tax? If they had not brought the house it would be inherited.

When did the parents die? Who dealt with their estates? Whatever inheritance tax due should have been dealt with by the personal representatives of their estates at that time.

If the house is now sold CGT will be due on the sale. (If there is a big enough profit.) You have no choice in the matter.