inherited property and capital gains tax

jack2020

The forum's input on this  situation would be much appreciated . My dad died in 2015 and my sibling moved into his house 9 months later , probate value was £160,000 and todays value will be in the region of £300,000 plus , sibling has spent £40,000 on renovations . The property still belongs to the estate ( my late father )and is in the process of being transferred to my sibling . What are the tax implications here? Would capital gains tax be payable by the estate on the transfer or by both of us as beneficiaries and would my sibling be entitled to a private residence relief  as she has lived there for 8 years , or me just be liable as it would be deemed a second home and also would stamp duty be an issue here . TIA 

Jeremy535897

Have a look at:
https://www.gov.uk/government/publications/death-personal-representatives-and-legatees-hs282-self-assessment-helpsheet/hs282-death-personal-representatives-and-legatees-2024

Bookworm105

transfer of legal title in the property has no impact on CGT as the latter is based on beneficial ownership, not legal ownership.
as per link above beneficial ownership transfers to the legatees at date of death, so, subject to confirmation, it appears (please confirm this is correct) that:
- sibling has share of property from date of death, moved in as main home 9 months after that date. Resident there ever since  
- you have share of property from date of death, but have never lived there 

sibling is now to become sole (confirm?) owner, so your share is being transferred to her and that will trigger CGT payable by you based on gain of your share since date of death (whether cash changes hands or not in relation to the "transfer")

sibling does not have any CGT as they are not triggering CGT by disposing of (selling) anything 


in SDLT terms it is far from clear if actual cash is changing hands for the "transfer"
if it is not, then for a property without a mortgage there is no exchange of  "chargeable consideration" (cash received in exchange for property title transferred over) so zero SDLT would be due 

if cash is exchanged then this would be sibling acquiring a further share in a property where they own at least 25% thereof already, so not additional rate. Standard rate SDLT (assuming this is in England not Scotland) would apply payable by sibling based on physical cash changing hands, so probably zero tax given 50% of 300k is well below the SDLT threshold of 250k (applicable until next year when it drops to 125k)

Keep_pedalling

Was the house left solely to your sibling? If not did you take other assets equal to what would have been your share of the house?

If the answer to either of the above is yes then you have no CGT liability.

If that is not the case it is unfortunate you have left it so long as it is now too late to make a deed of variation.

WindfallWendy

Can I chuck something else in here please?

I was the Executor for my Dad who died in Nov 2022. I inherited my Nan's house via his Will, which I sold last month.

I sold it at the level it was valued at when I transferred it into my name which would have been the same as the value of it in Probate. Given I've also sold it as quickly as I could - and I think there is also a "within 2 years" feature in the guidance I've seen - I don't believe I have to worry about Capital Gains. 

Does anyone think differently??

Bookworm105

WindfallWendy said:

Does anyone think differently??

was any inheritance tax physically paid?
if not then as previously mentioned your property valuations have not been agreed by HMRC and may yet be challenged when they receive the routine report of all property sales and match that to the probate info they hold.

The question then becomes will the difference in values that they think apply be big enough to justify the time and money they would need to incur to challenge you. In many cases it won't

there is no "2 year" window in which to avoid CGT