IHT and Capital Gains

revruss · 25 November 2021 at 1:50PM

Hi all.
I have been left a property in a relatives will and am the sole beneficiary. I want to sell the property as soon as I can.
I dont think the value of the property will breach the IHT threshold of 325K, however I am concerned about Capital Gains Tax.
From my understanding, this tax is triggered when I sell the property and is based on the difference between the valuation at probate and what I eventually sell the house for further down the line.
So my thinking is, if I sell the house as soon as possible, I should minimize any CGT as the property would not have increased in value in a short time?
Your thoughts please!!!

SeniorSam · 25 November 2021 at 2:59PM

Everyone has a Capital Gains Allowance and no tax is payable within that sum of £12,300 at present.

The value of this additional property will add to your own estate value and after the nil rate band allowance of £325,000 and residential allowance of your own property, you need to be aware of any liability. Having a suitably worded Will can help mitigate future taxes and you may therefore need to speak with a solicitor for further advice.

Keep_pedalling · 25 November 2021 at 4:14PM

Don’t let the tax tail wag the dog. The only reason you would pay CGT is because the value has increased, so taking action to avoid that means neither you or the HMRC makes a gain, but if you do for some reason delay the sale and the value increase you still get to keep over 70% of that gain.