CGT on increase in property value

[DaveW]

My late mother left me one-third of her half share (so, one-sixth) of the family home about 10 years ago. My father continues to own his half and still lives in the property (this was stipulated in my mothers will), whilst I have moved out some time ago and currently own my own home. When eventually the house is sold and I get one-sixth of the value (disregarding for the time being my father's will) what is my tax liability? Do I pay inheritance tax on the value I receive now or is inheritance tax calculated on it's value 10 years ago (when I inherited the share of the property) and then CGT is applied to the difference? Hopefully this situation isn't going to arise for some time but I am curious as to the tax position.

Thanks for any help.

[James Smith]

Dave,

You will pay CGT on the difference between the value of the property if it is ever sold and the market value on your 1/6th when it was gifted to you by your later mother.

You will get various reliefÂ’s along the way but may well end up with some CGT due. Some time prior to any sale you should seek professional advice to see if anything can be done, for example splitting your share with a spouse may mean *2 personal CGT allowances which could be enough to eliminate any gain. Do however give your accountant a good chance to do something with it however, if you leave it until the property is on the market or has just been sold it is normally a bit late in the day to do much planning with you!

Regards,

James Smith
Chartered Accountant
www.jamesemsith.co.uk
01284 764436