Capital gains tax on selling an expensive house for a cheaper one

Bookworm225

fireballpaul said:

poseidon1 said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

MarlowMallard said:

Correct, but note that it must have been your main home for nearly all the time you owned it...  if you rented it out in the past and lived elsewhere then moved in, only the fraction of time you lived there plus the final year or so is CGT-free.  A married/civil partner couple can only have one "main home" between them. 

No problem. It's been my main home for 20 years,  rented it from my parents for about 17 years and now have it in my name for the last 3. 

Presumably it was not your parent’s main residence then? In that case how was the disposal of the property to you by your parents three years ago treated with respect to capital gains tax? 

Can you confirm how the property ended up in your name?

it was gifted over and some CGT was paid.   

Excellent! Is your parents’ estate likely to be above £650000 or £1m if it would include their main residence? If not, the seven year rule is irrelevant as no IHT in play. 

No, i think it's under £500k (now that this £250k house is not part of it) but the house was gifted to avoid IHT as there's no reason to think they won't live another 4 years.    I am certain there would be some IHT if this had not been done

Can you explain as to why you think that there is a potential liability to inheritance tax? If your mother and father are both alive and well and own a property there would be no inheritance tax payable unless the estate exceeded £1m. You have indicated that it will be nowhere near that, even if the gifted property is included. 

I just read this online:

£325,000

The inheritance tax threshold in the UK is currently £325,000. This means that the first £325,000 of an estate is tax-free, and the 40% tax rate applies only to assets over this threshold. If a house the deceased lived in before dying is left to their children or grandchildren, the threshold increases to £500,000. 

Age UK+4

Seems the threshold is £325k not £1m??  

Did you not read the age uk article in full? It made it clear where £1million comes from.

Forumites here are generous in trying to assist where there is genuine lack of knowledge or misconceptions, but the least you could have done is to have read beyond the first few lines of the article you chose to share.

Just a thought, but if one parent dies and leaves everything to the spouse, doesn't that single parent now have double the assets from then on?   Then when the worst happens to them they will have a higher threshold. 

what is your question?
we have already explained several times how the allowances transfer upon first death, so you can already answer the outcome of the "double assets" and available allowance against it 

[Deleted User]

fireballpaul said:

poseidon1 said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

MarlowMallard said:

Correct, but note that it must have been your main home for nearly all the time you owned it...  if you rented it out in the past and lived elsewhere then moved in, only the fraction of time you lived there plus the final year or so is CGT-free.  A married/civil partner couple can only have one "main home" between them. 

No problem. It's been my main home for 20 years,  rented it from my parents for about 17 years and now have it in my name for the last 3. 

Presumably it was not your parent’s main residence then? In that case how was the disposal of the property to you by your parents three years ago treated with respect to capital gains tax? 

Can you confirm how the property ended up in your name?

it was gifted over and some CGT was paid.   

Excellent! Is your parents’ estate likely to be above £650000 or £1m if it would include their main residence? If not, the seven year rule is irrelevant as no IHT in play. 

No, i think it's under £500k (now that this £250k house is not part of it) but the house was gifted to avoid IHT as there's no reason to think they won't live another 4 years.    I am certain there would be some IHT if this had not been done

Can you explain as to why you think that there is a potential liability to inheritance tax? If your mother and father are both alive and well and own a property there would be no inheritance tax payable unless the estate exceeded £1m. You have indicated that it will be nowhere near that, even if the gifted property is included. 

I just read this online:

£325,000

The inheritance tax threshold in the UK is currently £325,000. This means that the first £325,000 of an estate is tax-free, and the 40% tax rate applies only to assets over this threshold. If a house the deceased lived in before dying is left to their children or grandchildren, the threshold increases to £500,000. 

Age UK+4

Seems the threshold is £325k not £1m??  

Did you not read the age uk article in full? It made it clear where £1million comes from.

Forumites here are generous in trying to assist where there is genuine lack of knowledge or misconceptions, but the least you could have done is to have read beyond the first few lines of the article you chose to share.

Just a thought, but if one parent dies and leaves everything to the spouse, doesn't that single parent now have double the assets from then on?   Then when the worst happens to them they will have a higher threshold. 

That’s kind of the point of the transferable NRB!

fireballpaul

[Deleted User] said:

fireballpaul said:

poseidon1 said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

[Deleted User] said:

fireballpaul said:

MarlowMallard said:

Correct, but note that it must have been your main home for nearly all the time you owned it...  if you rented it out in the past and lived elsewhere then moved in, only the fraction of time you lived there plus the final year or so is CGT-free.  A married/civil partner couple can only have one "main home" between them. 

No problem. It's been my main home for 20 years,  rented it from my parents for about 17 years and now have it in my name for the last 3. 

Presumably it was not your parent’s main residence then? In that case how was the disposal of the property to you by your parents three years ago treated with respect to capital gains tax? 

Can you confirm how the property ended up in your name?

it was gifted over and some CGT was paid.   

Excellent! Is your parents’ estate likely to be above £650000 or £1m if it would include their main residence? If not, the seven year rule is irrelevant as no IHT in play. 

No, i think it's under £500k (now that this £250k house is not part of it) but the house was gifted to avoid IHT as there's no reason to think they won't live another 4 years.    I am certain there would be some IHT if this had not been done

Can you explain as to why you think that there is a potential liability to inheritance tax? If your mother and father are both alive and well and own a property there would be no inheritance tax payable unless the estate exceeded £1m. You have indicated that it will be nowhere near that, even if the gifted property is included. 

I just read this online:

£325,000

The inheritance tax threshold in the UK is currently £325,000. This means that the first £325,000 of an estate is tax-free, and the 40% tax rate applies only to assets over this threshold. If a house the deceased lived in before dying is left to their children or grandchildren, the threshold increases to £500,000. 

Age UK+4

Seems the threshold is £325k not £1m??  

Did you not read the age uk article in full? It made it clear where £1million comes from.

Forumites here are generous in trying to assist where there is genuine lack of knowledge or misconceptions, but the least you could have done is to have read beyond the first few lines of the article you chose to share.

Just a thought, but if one parent dies and leaves everything to the spouse, doesn't that single parent now have double the assets from then on?   Then when the worst happens to them they will have a higher threshold. 

That’s kind of the point of the transferable NRB!

Very good idea too.   Keeps it out of the tax system