Q re capital gains

crispeater

my parents are selling a property which isnt there home as my dad feels he doesnt have long in this world and would rather spend his money while he can :rolleyes:

anyway, my mum will be putting her half of the money back into another property so she wont have to pay capital gains but my dad obviously will be.. or should be! he seems to think he can get away without paying it.
my question is - if he does do this and the inland revenue catch up at some point im concerned that they will catch up once my dad has passed away and the debt will roll over onto my mum. is this possible? obviously im not sure how any of this works which is why im seeking advice from you guys.
my dad is being an !!!!!! and i dont see why my mum should have to pay off his debts when he passes away. so i will try and make sure she pays the capital gains tax out of his part of the profit before giving him any more money.

monkeysnail

Have they ever lived in the property even for 1 year?

By the way, even if your mom uses her share of the money to buy another property, if the property being sold was not their main residence at one point, she is still liable to Capital gains tax. Both of them are on their share. Less of course, taper relief and yearly CGT allowance (around £8,500) each.

There are a few ways to go about this:
1) They can try and live in the property for 1 year, then sell it. It can wipe out their CGT or reduce it dramatically.
2) Remortgage it and just release the equity from it so that the money they get are not taxable as they just become part of the mortgage. Hopefully, the tenants pay the rent to cover this mortgage.
3) If they decide to release equity instead and hold on to the property till they die (did not mean to be direct, but there's no other way to say it), they transfer the property to their children at Market value, thus you guys not incurring any Capital Gains tax if you decide to sell it right after.

With inheritance tax, if they remortgaged to the hilt (max allowed by the bank), Inheritance tax will only be on the net. (Market value less Total owed to bank)

In short, it works both ways if they do not sell and just remortgage to get some money out.