Postby AGoodman » Mon Jan 15, 2018 3:34 pm
Yes, I'm afraid CGT will be payable if your parents own the house but it is unlikely to be quite that much.
Start with the gross gain: £130,000
Deduct costs of acquisition and sale (legal/agents fees)
If they both own the property they can deduct £11,300 annual exemption each this year - a total of £22,600 (reducing the gain to £107,400 ignoring deductions).
Then the rates are 18% basic rate and 28% higher rate.
If you parents each had an income of £20,000, they would each pay 18% on £25,000 (basic rate) and 28% on £28,700 (higher rate), a grand total of £25k. If their income was lower the tax would be lower. If higher, then I'm afraid the tax would be higher.
You could reduce the tax further by up to £6,300 if your parents gave you half the property by 5 April 2018 (a one page declaration of trust would do it) and either gave you the other half after 5 April or sold it with you after 5 April. This would allow them to use two annual exemptions each and take the tax liability down by up to £19k. There is a small risk because they would be triggering the tax charge before the house was actually sold so if you did not sell by the end of the year, they would have to fund the tax themselves.