Capital Gains Tax on under value home?

hollynrc

I can't find an answer to this question anywhere.

6 years ago, my FiL sold his second home to us at a discount - it was valued at 100k, and we bought it for 60k. 

We've lived there for 6 years, and renovated. It's now worth approx 140k and we've agreed a sale for 136k today. 

Will we have to pay CGT on the gain we've made? Some places say no, because it was a private residence for us for 6 years. Some say yes, because it was under value and we've 'gained' 76k profit.

Thanks!

BarelySentientAI

You don't pay CGT on selling your main home.  Called Private Residence Relief (which is why you might have that term in your head).

Hoenir

hollynrc said:

Will we have to pay CGT on the gain we've made? 

Your FIL has an undeclared liability though. 

user1977

Hoenir said:

hollynrc said:

Will we have to pay CGT on the gain we've made? 

Your FIL has an undeclared liability though. 

We don’t know it’s undeclared.

Olinda99

you have no CCT liability 

your father-in-law, on the other hand, should have declared the market value rather than the actual low sale value i.e paid capital gains tax on 100k sale. He may well, of course, have done exactly that

Bookworm105

as long as it has been your "main" (only) residence for the entire time you have owned it, there is no CGT to pay because any gain in value (whether from a discounted start point or not) is covered in full by PRR, meaning no tax to calculate or declare the sale to HMRC 

hollynrc

Hoenir said:

hollynrc said:

Will we have to pay CGT on the gain we've made? 

Your FIL has an undeclared liability though. 

I know he had to pay CGT when he sold it to us  

theartfullodger

HMRC have the power (obvious reasons) to tax things at their actual market value rather than the "cunning plan" prices (some) people - not FiL obvs - document.

Hoenir

theartfullodger said:

HMRC have the power (obvious reasons) to tax things at their actual market value rather than the "cunning plan" prices (some) people - not FiL obvs - document.

Particularly transactions between connected parties where at "undervalue" is as old as the hills. Over the years never ceased to surprise me how many people think it's a loophole to be exploited. Only later to get a rude awakening.