Council House Sale. Will I be liable for capital gains tax?

mokell

Can some one help answer some questions regarding a council house sale ? I lived with my mum,we bought our council house together in 1989. I moved out in 1996 when I got married and I live in a different house/have a mortgage with husband. I was a tenants in common with my Mum and she sadly passed away recently and the house ownership has transferred to me. I am swithering whether to rent or sell the property. If I sell the property, will I be liable for capital gains tax? Thanks in advance

macman

Yes you will, but not on the period '89 to '96 when you were resident there. What proportion of the property did you own during that time? 50%?
It's not a council house sale, it ceased being a council house in '89. 

greatcrested

Maybe.Depends on the gain involved.

* 1989: you joint purchased a property - 50%? It was your main residence so no CGT liability

* 1996: you moved out. No longer yourmain residence so CGT liability kicks in on your (50%?). What was the exact value at that time?

* 2020 (??). you inheritted your mother's 50%. CGT liability on 100% kicks in. What was the exact value at that time?

* 2021 perhaps. You sell.

You calculate the increase in value of your 50% from 1996 to date of sale, plus the additional 50% from date of inheritance to date of sale. If it exceeds the annual CGT allowance, you will pay CGT.

AdrianC

Yes.

1989 to now is 31 years. 1996 to now is 24 years, 77% of the time you have owned your 50% of the property.

You will be liable to CGT on 77% of 50% of the gain, less your allowance.

If you leave it longer before sale, that proportion will increase, and you may become liable to CGT on the other 50%, too.

Do you want to run a residential lettings business? Will it be profitable? Can you separate the emotional attachment to "mum's house" from the property simply being a business asset?

greatcrested

AdrianC said:

Yes.

1989 to now is 31 years. 1996 to now is 24 years, 77% of the time you have owned your 50% of the property.

You will be liable to CGT on 77% of 50% of the gain, less your allowance.

If you leave it longer before sale, that proportion will increase, and you may become liable to CGT on the other 50%, too.

Do you want to run a residential lettings business? Will it be profitable? Can you separate the emotional attachment to "mum's house" from the property simply being a business asset?

But 1989 - 1996 it was the OP's main residence, therefor exempt.

AdrianC

greatcrested said:

AdrianC said:

Yes.

1989 to now is 31 years. 1996 to now is 24 years, 77% of the time you have owned your 50% of the property.

You will be liable to CGT on 77% of 50% of the gain, less your allowance.

If you leave it longer before sale, that proportion will increase, and you may become liable to CGT on the other 50%, too.

Do you want to run a residential lettings business? Will it be profitable? Can you separate the emotional attachment to "mum's house" from the property simply being a business asset?

But 1989 - 1996 it was the OP's main residence, therefor exempt.

It would be exempt for that period - hence the liability on the period it wasn't their residence - 1996-date.

macman

The 50% liability is of course an assumption, without further info from the OP.

AdrianC

macman said:

The 50% liability is of course an assumption, without further info from the OP.

You're right. If the joint tenancy were a different split, that would be the split that would apply to the CGT.

oldbikebloke

AdrianC said:

It would be exempt for that period - hence the liability on the period it wasn't their residence - 1996-date.

77% x x% agreed,
plus the residual gain on the (unconfirmed) % inherited "tenants in common with my Mum and she sadly passed away recently"