capital gains loophole

[pepsi2020]

Hi

My Father has two houses on the same street 13 years ago we all lived together as a family Mum, Dad and my two brothers and then my Parents were inherited a house 7 doors down from which myself my younger brother mum and dad moved into so that is where the second house had come from .. So my older brother stayed with his girlfriend in the original house and they have been there ever since and we moved in to the other house up until this point ... The time has come to sell the house we as a family live in as my father wants to help us get on the property ladder individually and then he will move back into the original house .. So we have been informed we have to pay capital gains tax on the house my brother lived in for 13 years .. Is there a loophole that we can avoid paying so much tax as the house is in London and has gone up substantially the house my brother lived in wasn't run as a business basically he just paid the bills plus we owe about £180k on a mortgage... My father is looking at moving abroad for 5 years to try and lower the capital gains tax instead of moving back into his original house but I doubt that will work...

Has anyone got any advice please

Thanks

[bd6759]

Is this correct?

Father owned and lived in house A until 13 years ago.

Father inherits house B and moved into that. House B is now his home.

Father intends to sell house B, and move back into house A.

If that is correct, there is no CGT to pay on house A because he had not disposed of it. CGT is only charged when you dispose of something.

House B will be exempt from CGT because it was his home throughout the time he owned it.

[pepsi2020]

Hi

Thanks for the reply

Yes that is correct..

On the house my father is going to move into that my brother has been living in for the past 13 years is there a way he can inherit that to us or sell it and reduce the capital gains owed, my father was under the impression if he moves back in the house and 5 or 10 years down the line the capital gains tax will be reduced as it will now be his new residence or do we still have to pay the capital gain when the house is sold or inherited at the full amount for the 13 years my brother has been living there..

He was badly advised I am led to believe years ago that if his son moves in he will get a tax relief because he is not renting it out.


Thanks

Andy

[bd6759]

There is no CGT on death, so if he keeps the house there is no cgt to pay.

If he sells the house, the 9 of the 13 years will not not be covered by any relief (4 of the years are disregarded). This is a simple apportionment. If he owns the house for 20 years, 11 of them will be exempt.

[pepsi2020]

Thank You