Capital gains tax on property

Bookworm105

Holl774 said:

None of the sons have lived in the property since before the mothers death. It was lived in from Mother passing away by the dad who owned 50% of the property and as you said the sons owned 25% each, then a further 25% each after dad passed away. 

Holl774 said:

The will states so much needs to go to a relative in the will which we have to do by law, is this taken into account?

CGT position is based on who was the beneficial (not legal) owner of the property - ie who gets the money from the asset. Both parental wills clearly make the sons the beneficial owners, therefore date of change of names on deeds is irrelevant

The CGT position requires calculation of two separate gains with the tax then applied to the total of the two. for each person. The tax rate paid by each person would depend on there respective individual circumstances meaning, all@18% or all @24% or a mix of both rates

1. Gain from value at date of mother's death in 2013 to selling price agreed at date of contract exchange in Oct 24 applied to the 25% that each son owned over the period. 300,000 to 440,400 = gain 140,000 x 25% = 35,000 per son 
PLUS
2. Gain from value at date of father's death in June 2023 to selling price agreed at date of contract exchange in Oct 24 applied to the 25% that each son owned over the period. Gain cannot be calculated until value for father's probate is revealed. 

Note the above assumes that inheritance tax was not paid on either death and therefore the value at death has not yet been agreed by HMRC and could (theoretically) be changed by HMRC even now.

I assume the relative is a beneficiary of father's will? Finding the cash to pay that has no impact on the CGT position of either son, but if the estate does not have the cash then it would mean in practical terms each son would have to put some money back into the estate so it can be paid to the relative. In reality therefore the sons would receive a slightly smaller inheritance in cash terms but are still liable for CGT on the full 25% of father's legacy of the house value. It was a badly drafted will as a pecuniary legacy (a fixed sum of money in a will) always takes precedence over a residual legacy (a % share of what remains) so never do one if the estate does not have the cash to cover it without having to sell something.

Holl774

The will states both sons are the beneficiaries, we have recently sold the property and due to complete on the sale so i wanted to make sure i am filling int he CGT document accurately to HRMC dont want to get into any trouble. then the CGT tax will be due so can use the money from the sale to day this There is no inheritance tax as its only the property which is an asset and is equally divided between both of them( documented in the will) so will be under the threshold. 

The price of the house valued at date of death of father was the same as selling price ( took a while to sell)