advice with capital gains

rube

hi! can anyone help us ref; capital gains? my friends parent died in 1998 leaving the property to the 3 children.my friend bought out the other family members and since then the property value has increased by 90k,friend is married and lives at different address,the property was empty for first 4 yrs and for the last 5yrs a good friend has been living there rent free but pays the council tax/utility bills etc.. any advice on tax/capital gains??

fengirl_2

If the property is not let for money, there is no tax to pay.
CGT will only arise when he comes to sell. This will be based on the Probate value of one third less a third of the proceeds and then the amount he paid for the other two thirds, less the proceeds of the other two thirds. Has he passed over half of his share to his wife in order to maximise CGT reliefs?

rube

thanks fengirl!!friend will transfer half share to partner,he doesn't recall having probate value,he says the 3 family members had the property valued by estate agent at the time they were all present but this was just a verbal estimate.they all agreed on a set figure of 24k divided between the 3.so he paid them 8k each(16k not including his share) by raising funds partly by way of a 10k loan, can this loan be offset against anything.sorry to ask again but is CGT against the 24k or 16k then??selling for possible100k. thanks again!

silvercar

interest on loan would be set against rental income, if you had any.

gain would be 100k-24k=76k less any acquisition costs and selling costs.