Capital Gains Tax on sale of inherited property - assistance requested

Downandoutmoney

After the death of our father last year, my brother and I inherited 25% each of my parent's home. My mother has decided she wanted to sell. Unfortunately the valuation given for the property in the finalisation of his estate was £300,000, which was reported to the UK government, however the property was sold for roughly £375,000, so the sale price is £75,000 higher than the valuation. This leaves my brother and I responsible for Capital Gains Tax on 50% of the £75,000 (So Capital Gains Tax due on £18,750 each). To complicate matters, one of us lives in Australia, the other in Denmark, we pay tax there, not in the UK, although I do have property here in the UK so do complete a UK tax return, but haven't made any Capital Gains this year. I am intending to see an accountant tomorrow before I leave the UK, but hoped I could go in with some possible answers to my questions already:

• Can we reduce the Capital Gains by including the costs of selling the house, ie if it cost us £5,000 to market and sell the house (ie solicitors fees), so the actual Capital Gains we are due to be taxed on be reduced to £70,000?
• I believe we are eligible for the full Capital Gains Tax allowance of £12,600, meaing we would be due to pay tax on £6,150, is this correct?
• Would the tax rate be 18%?

Thank you very much in advance to anyone who can assist me with this.

Keep_pedalling

Did your father leave you that his share in the house outright or did he put it in trust with your mother having a life interest? A good will would have done the latter as it provides additional security for the surviving spouse and avoided the CGT issue when the house is eventually sold however long that may be.

Downandoutmoney

My father left it to us with a life interest for my mother, however I don't believe that protects us from CGT once we sell the house. The new house we are purchasing is being bought in my mother's name with us providing funds by way of a security to keep our names off of the deeds to prevent us bein gliable for the 4% second home tax.

Keep_pedalling

Downandoutmoney said:

My father left it to us with a life interest for my mother, however I don't believe that protects us from CGT once we sell the house. The new house we are purchasing is being bought in my mother's name with us providing funds by way of a security to keep our names off of the deeds to prevent us bein gliable for the 4% second home tax.

You really should take legal advice, what you are proposing does not sound right. Currently the house is owned jointly by your mother and the trust, and there is no CG liability on the sale of the property. Selling the house does not automatically wind the trust up, assuming the terms of the trust allow it her new house can remain under the current ownership set up. There is also the issue of any equity released by the move from the trust. Either this goes to you and your sibling or the capital remains in the trust with any income going to your mother.

I would consult the solicitor who drew up the will on how to proceed.