Capital Gains Tax Help Needed

Johnny2323

If somebody could help me out with this it would be wonderful and really help me sleep a bit better at night as I am very worried about it.

When my mum died a few years ago she left me a quarter of the house she shared with my dad in her will. A year or so later my Dad sold the house and bought a new one at the same value. However because the value of the original house went up 100k between my mothers death and his sale I'm now liable (I think) to capital gains tax. Is this the case? I took no money out and have absolutely no desire to do so, all the profits went into my dad's new home. However I am on a low salary, barely keeping my head above water and have no savings - or no way of really finding any money to pay a bill that using various CGT calculators on the web could be as much as 10k. My father can't help as he's past retirement age and has everything tied up in the house.

I don't want to be a tax dodger or anything but does anyone know if there is any way of deferring or decreasing my payment in this case?

fengirl_2

Assuming you did not live in the house between your mother's death and the sale of the house, then you are liable to CGT on your one quarter share.
If you can tell us the dates of your mother's death and the sale of the property as well as the Probate value and sale price, we will be able to tell you your approximate liability.
You can always try and negotiate a payment plan with HMRC, although they would argue that you should have retained some of the sale proceeds to pay the tax.

Johnny2323

Thanks fengirl.
Probate value was 200k in December 2001 Sale value in June 2006 was 300k
Does the fact that I have not taken any money out make no difference at all? )

hopon

Assuming those figures are the full value (and not your quarter share)

Proceeds £75000
Costs £50000
Gain £25000
Taper Reflief £3750
Tapered Gain £21250
Allowance £9200
Taxable £12050

That would then be taxed at either 10% 20% or 40% depending on your other income so at 20% would be £2410

Johnny2323

Thank you Hopon. Yes those figures are full value not my quarter share.
So how do you know which percentage is applicable to you? I'm self employed.

hopon

When you do your self assessment return for the year for your self employment the Capital Gains get brought in to your total income for the year, you can then see what band you'll be dropping in to. Do you do your own return or have you got an accountant?

silvercar

On a 300k property, I would assume selling costs of about 10k max (legal, estate agent etc).

So the property has gained 90k since probate and your share would be 22.5k. 4 full years of ownership = 10% taper relief reducing the 22.5k to 20.25k. Allowance = 9.2k so taxable CGT= 11.05k. At 20% tax that would be a bill of £2,210. The figures will be included in your tax return for 2006-07 and payable by Jan 31, 2008.

The tax is payable at your marginal rate.