Capital Gains Tax on inherited house

captrico

Myself and my brother recently inherited my mothers paid off house.  He lives overseas and I live here in the UK.   He wants to sell the house on.  I also think this probably the best thing too.   Its likely the house will sell for around what I valued it at in probate, which has been granted.   

Question: Do i need to be residing in the house at the time of the sale in order to avoid CGT? I currently rent a flat and dont own property.  And how does the fact that my brother who lives overseas affect the sale outcome?  Will his entitlement to the property affect any CGT rules?   Are there steps i need to take that could help limit any tax owed after the sale?

The deed is still in my parents name and i was advised to leave that alone until the sale is complete and deed is transferred to the new owner.  

p00hsticks

If the house sells for the same as you declared at probate then there is no capital gain, as the probate value is taken as the starting point. 

If it sells for more than that (with selling costs deducted) then the estate (not you and your brother personally) could be liable to a capital gain.

As you are not the owner, then whether you live in the property or not is immaterial. 

lisyloo

Do you both actually own it or is it currently in the estate?
I'm asking if it's an option for it to be sold as part of the estate so you inherit the cash rather then the house.
We did it that way.

If you have actually inherited the property then if there is no gain since inheritance then there is no CGT.

You could move into it and make it your prime residence (you'd need to do this properly and transfer all your bills, addresses, insurance etc.), but only if you don't already own your home as you can only have ONE home that's tax free.

captrico

We/I dont own the home on the deed.  It is still in parents name. But grant of probate has been given (recent), and I am the executor and also beneficiary in the will.  I wasnt sure if i needed to move out of my rented flat and into the house BEFORE it was sold to prove residence and avoid CGT, or could i still live in my flat, sell the house and not pay CGT that way?  Would my brother who lives overseas and has properties be considered in this? Or is that irrelevant?

Keep_pedalling

CGT only applies to any gain in value over the valuation used for probate. 

Example - value for probate = £300,000, sold for £312,000, taxable gain = £12.000 - £3,000 annual exemption - £6,000 selling costs (solicitor & estate agent fees) = £3,000 @28% = £840.

From your opening post it seems there will be little if any gain so at worst the estate may have a very small CGT bill. Moving in won’t avoid this as the gain belongs to the estate not you. 

lisyloo

captrico said:

We/I dont own the home on the deed.  It is still in parents name. But grant of probate has been given (recent), and I am the executor and also beneficiary in the will.  I wasnt sure if i needed to move out of my rented flat and into the house BEFORE it was sold to prove residence and avoid CGT, or could i still live in my flat, sell the house and not pay CGT that way?  Would my brother who lives overseas and has properties be considered in this? Or is that irrelevant?

I would get the estate to sell the house and then you and your brother get inherited cash not a house.
The estate would be liable for CGT but only if there is a gain since the probate value.

captrico

The probate application was very limited when it came to estate value. Basically it asked for a total value of estate, including liquid assets, and didnt request itemized details. So with bank savings, and house value added together the sale of the house will come well under the estate value.   The estate agent gave a top end valuation and i used that.  Probate never asked for a separate house valuation so really there is no specific valuation other than the entire estate value.  Its not a high end property, perhaps 220k as is.   But mainly i was concerned about whether or not i needed to be residing in the property to avoid CGT, but it looks like you have all answered that question.  Thank you for the replies.