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Iht or cgt on gifted property with reservation?

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Iht or cgt on gifted property with reservation?

Postby Tingly » Fri Mar 17, 2017 11:36 am

I am considering selling a property which was gifted to me by my parents in feb 1987 who both comtinued to live there , firstly until my dad died in 1989 and then until my mother finally passed away in march 2014.

I lived there until march 1993 and then moved to my marital property whilst caring for my mum who still lived in the house

My mum died in march 2014 and i have rented it out from aug 2014 but hate doing this and wondered , if i sold it , as it was a gift with reservation, would i be subject to iht or cgt?

And if its iht , because the value of the estate was less than 300k would the sale then not attract tax?

Many Thanks

AGoodman
Posts: 74
Joined: Fri May 16, 2014 3:47 pm

Re: Iht or cgt on gifted property with reservation?

Postby AGoodman » Fri Mar 17, 2017 1:33 pm

You would be liable to CGT on the gain since 1987 but receive PPR on the period you lived there - about 17.5 years out of 24 so 73% of the gain (taking into account the additional 18 months).

The GROB was only relevant to IHT on your parents' deaths (the value of half the house would have been added back into their estates) and from what you say, it was unlikely to render their estates taxable.

AG

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Re: Iht or cgt on gifted property with reservation?

Postby Tingly » Fri Mar 17, 2017 2:34 pm

Thanks for the reply

AnthonyR
Posts: 63
Joined: Wed Feb 08, 2017 2:33 pm

Re: Iht or cgt on gifted property with reservation?

Postby AnthonyR » Sun Mar 19, 2017 6:47 pm

AGoodman wrote:You would be liable to CGT on the gain since 1987 but receive PPR on the period you lived there - about 17.5 years out of 24 so 73% of the gain (taking into account the additional 18 months).
AG


Ownership period was 1987-2017 = 30 years
PPR 1987 - 1993 = 6yrs + 1.5

So PPR is 7.5/30 = 25%
Plus lettings relief

Or am I missing something?
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Re: Iht or cgt on gifted property with reservation?

Postby Tingly » Mon Mar 20, 2017 12:31 pm

Hi there
Am a bit confused by the conflicting responses
Does this calc make sense to anyone please?

House owned for 30 years total
144 k gain after bits n bobs take off forselling fees etc

I lived there 6 yrears but get 18 months extra relief

As second poster said thats sort of 7.5 /30 x 144 which is 36 k

Let for 3 years 3/30 x 144 is 14.4k

Total 50 k exemption so cgt on 144-50 ( 94k cgtable?)

Thanks formany help

AGoodman
Posts: 74
Joined: Fri May 16, 2014 3:47 pm

Re: Iht or cgt on gifted property with reservation?

Postby AGoodman » Mon Mar 20, 2017 12:42 pm

Quite right, that is some spectacularly bad sums on my part.

AG

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Re: Iht or cgt on gifted property with reservation?

Postby Tingly » Mon Mar 20, 2017 12:58 pm

Thanks

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Re: Iht or cgt on gifted property with reservation?

Postby Tingly » Thu Apr 20, 2017 11:07 pm

Oh no, i've just thought of something else
On the personal relief side of things.
Mum and Dad gave me the property in 1987 as ive said but they continued to live there with me
I left in 1993 as weve established. Mum n dad continued to live there until dad died in 1999 and then mum died in 2014
I paid all there bills and looked after them as dad had alzheimers and mum had a stroke

Will i still be entitled to personal relief though because they lived there too or for some other reason i dont know about

I'm terrified of selling and giving away all their years of hard work .
Thanks

AnthonyR
Posts: 63
Joined: Wed Feb 08, 2017 2:33 pm

Re: Iht or cgt on gifted property with reservation?

Postby AnthonyR » Fri Apr 21, 2017 12:16 pm

If if was your main residence during the period you get the relief, regardless of if anyone else lived there.

However, just bear in mind that a large part of the gain will still be taxable (75% less any lettings relief for the period you've rented it out) for the period you didn't live there.
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

Tingly
Posts: 17
Joined: Fri Mar 17, 2017 12:12 am

Re: Iht or cgt on gifted property with reservation?

Postby Tingly » Fri Apr 21, 2017 12:48 pm

Thankyou Amthony R . Thos has helped me put my mind at rest. Am having sleepless nights over this.
So to my laymans calcs then


Property worth 50 k when got it 240k sales price Is £190000 gain

. 1. Ownweship from feb 1987 til say nov 2017 is 30 years n 2 months = 362 months

2. Lived there until march 1993 is 6 years 1 month plus 18 month discretionary = 90 months

3. Letting relief 3years /30 years ish owned x 190 gain = £19,000

4 personal relief is 190000 gain x 90 months ownership /362 total ownership is £47237

5. So tax equals
190 gain -
19 letting relief -
47 ish personal relief -
10 sales costs -
11 allowance

So about 103 k taxable at the difft rates

Does this make sense?

Thanks


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