Capital gains tax on inherited house?

Polly05

So 50% of any gain? 

Polly05

I'll need to look through the paperwork for a value of the house.
Thanks

Grumpy_chap

Say the property was worth £250k at time of death.
That means £125k value each.
Sister has been living there - did she pay rent on the 50% she did not own?
Say the property is now worth £300k
That means £150k each, so the capital gain for the OP is £25k, but the sister has to pay the OP £150k to buy her out.

pjcox2005

Although not all of it will be taxable as you have a £12.3k personal allowance which won't be subject to tax on those capital gains. 

Using the example above of a £25k gain, you'd only pay tax on £12.7k of it at either 18% or 28% depending on other income earnt/received in the year. So £3.5k at 28%.

If you have a spouse you may also wish to consider whether you can transfer a proportion of your share to the house to them so you have another £12.3k allowance to use.

Key is establishing probate value and then current value first. Given the state of the housing market due to Covid (and obviously dependent on the area) I would expect a lot of people would be able to argue no significant valuation change in 2 years given the depressed market. Worth doing now though if you're getting it sorted.

macman

Polly05 said:

So 50% of any gain? 

If your share is 50%, yes. There is a very good CGT calculator on the .gov site. I suggest you use that, as we know neither the gain on the property, the dates, nor your taxable income in the relevant tax year.