Question re. Capital Gains tax after inheritance

fadeaway87

Hi all,

My Mum passed away a few months ago, leaving an estate worth around £560k (House = £220k, savings = £340k). No IHT was due as all of my Dad’s unused IHT allowance was passed on when he died a few years ago.

The estate has been left to me & my brother, who are both executors. We’ve agreed between us that I will receive the house & £60k, whilst he’ll take the rest of the cash = £280k.

We’ve been granted probate & are starting the process of notifying banks, etc and getting monies moved, whilst also going through changing the property register with HM Land Registry, etc.

My question is really about my Capital Gains Tax obligations when I transfer the inherited house into my name & move in, at which point I will own 2 properties. Does this mean I will owe CGT when I sell my ‘first’ property as it would no longer be my main residence? I paid £140k for it & the current value would be around £180k.

The advice on the below mentions the need to notify HMRC of my main residence within 2 years. Does this mean there’s essentially 2 years grace for me to sell my first house as my 'main residence' & then transfer the inherited house into my name? Or does this only apply if I was to sell on the inherited house at a profit over & above the probate value (£220k)?

https://www.gov.uk/tax-property-money-shares-you-inherit/property

If it turns out that I would be liable for Capital Gains Tax, then I assume I’d just be better off waiting until I’ve sold my first house before transferring the inherited house into my name?

Apologies if this is a daft question and I’ve got it all wrapped around my head! Thanks for any help/advice.

Regards,

Keep_pedalling

No, you don’t loose your primary residence relief when you move into the inherited house. CGT will only likely to be an issue if you take years to sell your current home.

DRS1

Am I wrong to think the grace period after you move out is now only 9 months? It used to be a few years but I think they have been reducing it.

There used to be a thing where if you had two homes you could nominate which one was your PPR which may or may not help.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81907669#Comment_81907669

The last 9 months of ownership is covered by PRR but you are still unlikely to have a CGT liability if it take a year or two to sell because PRR would cover the vast majority of your ownership unless the period of ownership was short and the value had increased significantly in that time..

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81907816#Comment_81907816

Yes but there is a difference between having PPR relief for the whole period of ownership and having to do a time apportionment to work out if you have any gain to report.