Capital gains tax, Im confused help please!!

fluffysammy

Sorry if this is in wrong section!

Here is the story -
We moved to your house in 1992 as tennents, the owners sold it in 1996 for £45,000 to my father in law as we were unable to get a morgage at the time. He signed the house over into our name in 2002 (Value approx £150,000)
Who pays capital gains tax? I know he has to live 7 years for it to do some thing although i dont know what But i am in middle of a row, where i say (having read goverment CGT site) that his dad has to pay it when he gives it to us, and thast because we have always lived in it when we sell it we dont have to pay any CGT. BUT he says that his dad doesnt have to pay it, we will have to when we sell it. Im sure im right cause im the woman and i am right by default :rotfl: But i couldnt work it out by the goverment sites examples so does any one know if there is a simple right or wrong answwer or is it more complicated?
The reason its been brought up as we are thinking of seeing if we can get £30,000 mortgage on the house so we can clear all our debts and sort our selves out a bit, and husband says It will cause us a problem due to having to pay CGT

sammy xx

noh

You are correct. Your Father in Law may have had a CGT liability in the tax year in which he disposed of the property, a gift counts as a disposal. It is his responsibility to inform the HMRC and pay any tax due.
You will have no CGT liability if you dispose of the property as it has been your principal private residence assuming you have been living in it continuously upto the three years before sale.
Raising a mortgage on the house which is in your name will not cause any CGT liability.
The seven years you mention only has relevance to gifts and inheritance tax.
Some info here http://www.hmrc.gov.uk/leaflets/cgtfs1.htm#b2

Nigel

dzug

The 7 years is a different issue - it has to do with Inheritance Tax, not CGT.

Your father in law should have paid CGT when he signed it over to you in 2002.

You will not have to pay CGT when you sell as you have lived in it all the time you owned it.

fluffysammy

Thank you so much for your help :beer: I was sure i was right, but its a big sigh of relief that I am right and we are not going to end up with another huge bill.
Thank you :T

sammy xx

EdInvestor

You will have no CGT liability if you dispose of the property as it has been your principal private residence assuming you have been living in it continuously upto the three years before sale.

If it has been your PPR, the last 3 years will be CGT-free even if you have been letting it out during that period.