Capital Gains Tax on Inherited Rental Property

bloomfield2019

Hello,

I am just querying as to whether you would pay capital gains tax on a property you have inherited that was previously used as a rental. It has not been rented in two years.

Thanks

Slithery

Whether it has been let out or not is irrelevant. The only thing that matters for CGT purposes is if it has been your main residence during your period of ownership.

bloomfield2019

Thank you, that's useful to know. I had always believed that because of having a 'gain' in renting a property out, that it would also mean it would be taxable in CGT. I just didn't know if it would be the case if it was inherited but if the person inherited it had never used it as a rental whether it would still apply. 

The property is not a main residence, and was inherited through death, so I would presume the usual CGT of the value of the property when the owner dies to the value of sale applies.

Slithery

bloomfield2019 said:

The property is not a main residence, and was inherited through death, so I would presume the usual CGT of the value of the property when the owner dies to the value of sale applies.

Correct.   

theartfullodger

CGT payable on difference between value of property when it became yours and amount it was sold for, less allowable expenses (legal's, improvement costs, estate agent fees).  

Am presently paying CGT for this (no improvement).  

Quite right to.

bloomfield2019

theartfullodger said:

CGT payable on difference between value of property when it became yours and amount it was sold for, less allowable expenses (legal's, improvement costs, estate agent fees).  

Am presently paying CGT for this (no improvement).  

Quite right to.

Thank you

theartfullodger

You know what it was reported as worth for probate?

newsgroupmonkey_

OK, I think I know where the OP is going here (please confirM?)

I'll use some fictional prices.

Relative bought property for £50,000 and rented it out for a number of years.

By the time relative died, the house is now worth £350,000.

OP has now inherited said property.

So.....

Is the deceased relative's estate ALSO not responsible for CGT?

badger09

newsgroupmonkey_ said:

OK, I think I know where the OP is going here (please confirM?)

I'll use some fictional prices.

Relative bought property for £50,000 and rented it out for a number of years.

By the time relative died, the house is now worth £350,000.

OP has now inherited said property.

So.....

Is the deceased relative's estate ALSO not responsible for CGT?

No. Death is not a chargeable occasion for CGT. 

theartfullodger

Death is an IHT issue, not CGT.

newsgroupmonkey_

badger09 said:

newsgroupmonkey_ said:

OK, I think I know where the OP is going here (please confirM?)

I'll use some fictional prices.

Relative bought property for £50,000 and rented it out for a number of years.

By the time relative died, the house is now worth £350,000.

OP has now inherited said property.

So.....

Is the deceased relative's estate ALSO not responsible for CGT?

No. Death is not a chargeable occasion for CGT. 

Wow! Had absolutely no idea. I guess it's because arguably you could get hit twice - CGT and IHT (although there are plenty of other taxes that work this way).