CGT on flat sale

Tesremos969

Hello, and thanks in advance for any helpful comments.

I bought my flat in London in July 2007, jointly with my mum, for £357,500.
I lived in it for 10 years until Oct 2017, when I moved to the country and rented it out.
My mother then gifted me her half as inheritance in Oct 2018.
I have just sold the flat to my tenant (6/2024) for £610,000.

So my question is: how does the transfer of my mothers half to me effect the CGT? Is it as simple as taking the £222,500 profit and taking off the 60% relief for the 123 out of 204 months (roughly) that it was my main residence?

Many thanks

Mark_d

https://www.gov.uk/tax-sell-property/work-out-your-gain

I think you need to run the calculator for the half the property your initially bought, and then run it again for the half you inherited.

Jeremy535897

Did your mother declare the capital gain on the gift to you in 2018? She should have declared a capital gain of the market value of her share in October 2018 less half the acquisition costs plus acquisition costs.
The gain you make is equal to the sale proceeds, less selling costs, less the value of your mother's half share at October 2018, less half the purchase price and half the acquisition costs, less any improvements you paid for.
This gross gain is then time apportioned on a monthly basis between the period you occupied it as your main residence, to which you add the last 9 months of ownership, and the rest of the period.
Although you never lived in the flat while you owned all of it, the part of the gain made on your mother's gifted share is still reduced by the same percentage (section 222(7) TCGA 1992).
Remember to report the tax and pay the gain within 60 days of completion.

sheramber

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

[Deleted User]

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

I read the former (gift in will) -  there’s no real reason to doubt the latter. 

sheramber

[Deleted User] said:

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

I read the former (gift in will) -  there’s no real reason to doubt the latter. 

Could be what is sometimes described on here as an ‘early inheritance’ as in given before death.

Normally people just ‘inherit’ not receive a gift as inheritance.

Hence the question.

[Deleted User]

sheramber said:

[Deleted User] said:

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

I read the former (gift in will) -  there’s no real reason to doubt the latter. 

Could be what is sometimes described on here as an ‘early inheritance’ as in given before death.

Normally people just ‘inherit’ not receive a gift as inheritance.

Hence the question.

I agree with you - I just thought that there was a possibility that the op wasn’t completely using the correct terminology. 

Tesremos969

Jeremy535897 said:

Did your mother declare the capital gain on the gift to you in 2018? She should have declared a capital gain of the market value of her share in October 2018 less half the acquisition costs plus acquisition costs.
The gain you make is equal to the sale proceeds, less selling costs, less the value of your mother's half share at October 2018, less half the purchase price and half the acquisition costs, less any improvements you paid for.
This gross gain is then time apportioned on a monthly basis between the period you occupied it as your main residence, to which you add the last 9 months of ownership, and the rest of the period.
Although you never lived in the flat while you owned all of it, the part of the gain made on your mother's gifted share is still reduced by the same percentage (section 222(7) TCGA 1992).
Remember to report the tax and pay the gain within 60 days of completion.

I’m not sure if she did, perhaps not. It was a gift/early inheritance, my mother is still alive and well. In all honesty I don’t think that she did pay CGT at the time, I will find out.
I really appreciate your help

Tesremos969

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

In her lifetime. With a view to have passed it to me at least 7 years before her death. 

Tesremos969

sheramber said:

[Deleted User] said:

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

I read the former (gift in will) -  there’s no real reason to doubt the latter. 

Could be what is sometimes described on here as an ‘early inheritance’ as in given before death.

Normally people just ‘inherit’ not receive a gift as inheritance.

Hence the question.

My mistake in terminology, sorry for causing confusion. 

Bookworm105

Tesremos969 said:

sheramber said:

mother then gifted me her half as inheritance in Oct 2018.
was it inheritance after she died or was it a gift given in her  lifetime?

In her lifetime. With a view to have passed it to me at least 7 years before her death. 

ok, but that does not absolve her from her own CGT liability upon "disposal" of an asset she owned. Disposal is not just selling, it also includes gifting.

The fact she gifted it to her son makes that a "connected person" transaction
CG14580 - Connected persons - HMRC internal manual - GOV.UK (www.gov.uk)
Therefore mother would be liable for CGT in her own name on her 50% share of the gain (less the usual costs and her CGT allowance of course) between her original purchase cost and its market value in Oct 18.
CG12920 - Gifts and Capital Gains Tax: introduction - HMRC internal manual - GOV.UK (www.gov.uk)
Do I need to pay Capital Gains Tax if I gift property? – TaxScouts
The fact she got zero money from you because it was a gift is irrelevant for CGT purposes and she has no exemption from CGT on what was an investment property she never lived in.

You are however correct that if she lives until Nov 2025 (7 years from date of gift) it will be outside her estate for IHT purposes when she dies.

Therefore you cannot complete your CGT until you have a figure for the Oct 18 value.
if you are genuinely selling it this month you need to get a move on finding that out. You have to submit and pay your CGT within 60 days of the sale completion date.