Capital Gains Tax on my share of a property

johnbfan

My brother lives in the family home with Dad.  I have my own home.  October 2019 Dad passed away.  We have a solicitor to sort the estate because it was a mess.  The property is worth around £245,000.  Mum and Dad owned the house as Tenants in Common.  She died in 2010.  My brother and I already own her share.  My question....   will I have to pay capital gains tax on the quarter of the property I will receive?  As with IH there is an amount over which IH is payable.  Is this the same for CGT?  What is that amount?  If my share is worth around £61,000 will I be having to find the money for the tax?

Slithery

CGT is only due when you sell a property.

Make sure that you have a valuation for the property on both the date you inherited your mum's share and the date you inherit your father's share for when you do sell.

Why did you not ask your solicitor? It's what you're paying them for after all.

johnbfan

I panicked.  Dad gifted the house to me and my brother in 2016.  He died in 2019.  Its very worrying and confusing.  Have to get some valuations for the solicitor.  I suddenly thought how am I going to pay the CGT.?  Its been a very stressful time as we have not been able to register his death yet.  All seems to be just one very long process.

p00hsticks

johnbfan said:

I panicked.  Dad gifted the house to me and my brother in 2016.  He died in 2019.  Its very worrying and confusing.  Have to get some valuations for the solicitor.  I suddenly thought how am I going to pay the CGT.?  Its been a very stressful time as we have not been able to register his death yet.  All seems to be just one very long process.

What's happening with the house ?

As Slithery says, you don't pay CGT until the house is sold.

When it sells, you'll have the money from the sale for use to pay the CGT - (if any is due - unless property prices have risen dramatically in the last four years in the area, the chances are any gain will be covered by your CGT allowance of £12,300 so nothing will be owed) .

If the intention is for your brother to remain living in the house, then you need to come to some sort of agreement between yourselves - either he buys you out of your half of the property (with a mortgage if necessary), at which point you'll potentially need to pay CGT but will have the money he gives you to so so, or you retain ownership of your half of the property and he pays you rent.

But, as Slithery also says,  it is important if you haven't already done so to get documented the property value at the point your mother died and left you her half and then again at the time when your father gifted the remaining half to you.

macman

Why have you been unable to register his death yet? That was 9 months ago!

greatcrested

Please clarify/ confirm:

1) mum died in 2010. Her 50% passed to you & brother (as Tenants In Common 25% each?)

2)  dad passed (gifted) his 50% to you and brother in 2016 (25% each?)

3) So you and brother have fully owned the property since then (50% each)

4) dad died in Oct 2019. The value of the gift to you both in 2016 will be included in his Estate for Inhitance Tax as it was a gift within 7 years of his death. The first £325,000 of the Estate is free of IHT.

5) Your brother lives in the property. If/when it is sold he will not pay Capital Gains Tax as it is his main residence

6) If/when it is sold you will pay Capital Gains Tax as it is not your main residence

7) your CGT will be based on

a) the increase in value of your 25% between 2010 and the date of sale plus

b) the increase in value of your other 25% between 2016 and the date of sale

c) less your annual CGT annual allowance (currently £12,000)

d) less selling costs(estate agent, solicitor etc)

So you will need to know the market value in 2010, 2016 and when you sell.

8) whose name(s) is the property currently reistered in? If you don't know, pay £3 here and buy the Title.

https://www.gov.uk/capital-gains-tax

johnbfan

Apologies.  Have read through and am clearer. The property is in a trust which is being ended by a Deed of Appointment. This seems to me to mean,although money isn't changing hands, a form of selling. The house will be registered for tax purposes. Seems we already own a quarter of the property each so this involves a  quarter each again. 

greatcrested

Does not really answer the quesions posed,so I don't see how we can answer your original queries, other than with the responses already given.