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Inherited mum's house. Implications of living in that one and selling our own house

Hello, we have inherited a property and have grant of probate. It's my husband's mum's. No mortgage on it. We have our own home, no mortgage. We are toying with the idea of extending her property and living in that and selling our own property. Our own property was purchased 2003 so it has increased in value. We have only lived here. Mum's property is in a nicer area. We live on a redrow estate. So living in her bungalow is very appealing. What would the tax implications be? Would we have to pay capital gains tax on our own homes profit? Bought at £220 and now valued at around £465. Mum's bungalow valued at £450. Thank you. 
 

Comments

  • LJ._2
    LJ._2 Posts: 17 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Wife and I will likely be in a very similar situation as yourselves sometime in the near future. Mum's, and our house are both mortgage free, and I also wonder about potential capital gains tax although as our home is our own since 1986 and is our main home, I can't see if we would have to pay CGT. Much more worryingly is the two lots of Council Tax to pay, and having seen recent newspaper reports of higher bills to those with second homes which you and us will have until sold own home, and moved into Mothers.
    --
    LJ.
  • jsh99
    jsh99 Posts: 156 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    https://www.gov.uk/tax-sell-home

    Private Residence Relief

    You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:

    • you have one home and you’ve lived in it as your main home for all the time you’ve owned it
    • you have not let part of it out - this does not include having a lodger
    • you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
    • the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
    • you did not buy it just to make a gain

    If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.

  • LJ._2
    LJ._2 Posts: 17 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Thank you, that is a relief.
    --
    LJ.
  • sampup
    sampup Posts: 9 Forumite
    Part of the Furniture First Post
    Interesting. Thank you for replying.
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