Capital Gains Tax on Inherited Property

hamble102

AdrianC said:

hamble102 said:

So just to confirm, there should be no capital gains tax to pay from the sale of the house?

Correct.

There's been no gain in value between it coming into your ownership and being disposed of.
Even if it had gained in value since his death, it hasn't come into your ownership...

Thank you so much!

oldbikebloke

hamble102  said:
Thank you David.  Due to the pandemic, the sale price is considerably lower than it was valued at for inheritance tax purposes and well below the threshold of inheritance tax for my dad’s estate as the house passed to Dad when Mum passed away and we used her nil rate band as well..

technically...
 if sold by the estate, and the property had gained in value between the declared probate value submitted by the estate for IHT purposes and the amount the estate sells it for, then the estate would have a CGT liability.
The estate gets one CGT allowance but there is a time limit applicable to that. This annual allowance is available for the tax year of death and the following two tax years after that. After that time has expired there is no tax-free CGT allowance available to the estate. 

However, in OP's case it appears no CGT is due because 
- property is being sold by the estate,  
- no IHT has been paid as we assume the total estate appears not to be anywhere near the IHT threshold, even allowing for the valuation being "inaccurate". 
and, crucially
- the property will be sold for less than was declared as its probate value, ie there is no CGT gain in the first place 

hamble102

oldbikebloke said:

hamble102  said:
Thank you David.  Due to the pandemic, the sale price is considerably lower than it was valued at for inheritance tax purposes and well below the threshold of inheritance tax for my dad’s estate as the house passed to Dad when Mum passed away and we used her nil rate band as well..

technically...
 if sold by the estate, and the property had gained in value between the declared probate value submitted by the estate for IHT purposes and the amount the estate sells it for, then the estate would have a CGT liability.
The estate gets one CGT allowance but there is a time limit applicable to that. This annual allowance is available for the tax year of death and the following two tax years after that. After that time has expired there is no tax-free CGT allowance available to the estate. 

However, in OP's case it appears no CGT is due because 
- property is being sold by the estate,  
- no IHT has been paid as we assume the total estate appears not to be anywhere near the IHT threshold, even allowing for the valuation being "inaccurate". 
and, crucially
- the property will be sold for less than was declared as its probate value, ie there is no CGT gain in the first place 

Thank you for this.  After two of us losing our jobs, this is a relief to hear.  

shM1854

Hi
My mum signed over her house to my six siblings and I in 2008. My mum is now dead and the seven of us have now agreed to put it up for sale. The house is probably going to sell for about £240k meaning my one seventh share will be approximately £34k. When the house was first given to the seven of us by mum it would have been worth about £160k. Over the years I have spent a few thousand pounds towards the upkeep of the property. 

I also earn just under £80k a year.

Can you tell me if I will have to pay Capital Gains or any other tax when the house is sold?
Thanking you in anticipation.

diego_94

Best to start your own thread, not hijack someone elses

macman

Unlikely, because with a total gain of around £80k, your one seventh share of that gain is about £11,400, and some costs of purchase/sale and improvement (not maintenance) are deductible. If you have your full annual CGT allowance available, it would be within the annual allowance of £12,300. 
The gain would need to be more than £86,100 ( after allowable deductions) before you exceed your annual allowance.

Keswick1uk

AdrianC said:

IHT depends on the total value of his estate. If he was worth more than £325k - including the value of the house - then his estate pays 40% tax on everything above that value. The beneficiaries of the estate don't pay IHT, the estate does. The estate then distributes the remainder of his assets between the beneficiaries.

The total allowance is greater than 325k where there is a main residence being passed onto his children. 500k, I believe.

shM1854

Apologies. I just joined this site yesterday and didn’t realise I’d hijacked someone else’s post. I thought I was starting new thread.