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CGT on Inherited House Sale
Malcmandy
Posts: 91 Forumite
Hi, I have a scenario as below.
My father died in 2000 and left his half share of my parents house, to my brother and myself, so a quarter each, my mother retained her half and carried on living in it.
The Probate value was £440,000.
My mother died in 2017 and the Probate value was £520,000.
My brother and myself inherited her share on her death, giving us a half share each since 2017.
It has been rented out for a year and we intend to sell in the tax year 2019 -20. It has a value of c. £550,000.
How do we calculate the CGT allowances, as ownership % changed with the deaths ?
Grateful for any thoughts.
I an a non-taxpayer for 2019-20.
If necessary, transfer % can be made to spouse in order to use his CGT allowance on sale. Basic rate tax payer
Thank you.
My father died in 2000 and left his half share of my parents house, to my brother and myself, so a quarter each, my mother retained her half and carried on living in it.
The Probate value was £440,000.
My mother died in 2017 and the Probate value was £520,000.
My brother and myself inherited her share on her death, giving us a half share each since 2017.
It has been rented out for a year and we intend to sell in the tax year 2019 -20. It has a value of c. £550,000.
How do we calculate the CGT allowances, as ownership % changed with the deaths ?
Grateful for any thoughts.
I an a non-taxpayer for 2019-20.
If necessary, transfer % can be made to spouse in order to use his CGT allowance on sale. Basic rate tax payer
Thank you.
0
Comments
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I would think it will depend how your fathers share was left to you, was it held in trust with a life interest to your mother? If so I believe CGT would kick in once you actually received your share - ie on your mothers death.0
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It was an outright gift in his Will. We became joint owners with my mother. She carried on living in the house.0
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There's a very similar post here where the circumstances seem to be the same and the answer was, no CGT. I'll see if i can find it.
Here we go https://forums.moneysavingexpert.com/discussion/5957054/capital-gains-tax-after-selling-late-fathers-home
Read to the end.0 -
If necessary, transfer % can be made to spouse in order to use his CGT allowance on sale. Basic rate tax payer
If the transfer were made immediately prior to sale, HMRC might take a robust view of the circumstances. See
https://www.taxinsider.co.uk/681-How_to_Correctly_Gift_Property_to_Spouses.html
A transfer made only shortly before an eventual sale to a third party could also come under scrutiny by HMRC.
Was there an interest in possession trust to enable your mother to continue to occupy the property after your father's death?
Or did you, your brother and your mother become tenants-in-common?0 -
If you cannot avoid CGT you would think the calculation for each of you would be:
550/2 - 440/4 - 520/4 = £35K gain
Less disposal cost less annual allowance.0 -
As far as my brother and myself were concerned, it was my mother's home and she used it as such until she went into hospital and passed away. There were no restrictions put on it.
We are quite happy to pay any CGT that we are liable for, although will take any legal steps to reduce it.
However,, it is how the CGT will be calcukated, due to the different percentages at deaths, that we are not sure of and asking for advice on.0 -
asking for advice on.
Try PM to this poster who is very clued up on CGT
https://forums.moneysavingexpert.com/member.php?u=259250 -
I find it strange that a house worth £440,000 in 2000 is now only worth £550,000, most house prices have tripled since 2000.0
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This is probably what Tom99 said but I can’t understand the maths:
Think of the house as divided into four quarters - each of equal value. Dad’s gift to each of you was a quarter of the house and mums gift to each of you was a quarter of the house.
Work out the gain from dads probate value until sale value - you each owe one quarter of that gain. Work out the gain from mums probate value until sale value - you each owe a quarter of that gain
Less any personal allowances, other allowances and deductible expenses.
Tlc
Edit: just to add any years (months) that you lived in the property would be exempt from CGT.0 -
tom's numbers and TLC's words show and explain the mechanics of the calculation0
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