Selling a property inherited through deed of variation.

[simking84]

Hello and good morning to all.

I am seeking some genuine sincere help please.

I am based.. UK

LITTLE BACKGROUND.

My father died in 2016 Feb.. he did not have a will prior to death.

My mother wanted to transfer the house to me, the solicitors recommended a deed of variation and transfered to property to me (son). I at the same time also added my wife to the property as owner. All this was concluded through solicitors. This was done March 2017.

Since this time..m my mother died Nov 2019..

I currently have the house rented out but I am considering selling the property as I have had a recent valuation done to it.

Since I only paid legal fees at the time of the transfer and did not buy the property, what CGT or any tax would apply to me and how would this be calculated? Would I be subject to getting taxed?

For clarification, I do not live at that property as it is rented out by tenants.

At the time of the transfer, a valuation was done by the bank for the lending at the time and was valued at £140,000

Current market price as was valued yesterday is £190,000

Current mortgage on that property is £113,000.

Hope the information is clear for all to understand.

Would really be greatful for some help please. Thank you and please be safe all.. God bless you.

[maths]

For CGT the acquisition (or base) cost to you on acquiring 100% of father's property pursuant to the DoV would be the probate value (ie market value of property at date of father's death).

Om transferring a beneficial interest in the property thereafter to your wife there would be no CGT charge (as transfer inter-spouse) and wife would acquire her interest at your original base cost eg if probate value say 100k then if wife acquires a 50% interest her 50% would have a base cost of 50% OF 100K ie 50K.

On a sale of the property any capital gain would be shared 50/50.

[simking84]

Wow what an incredible reply... I dont want to sound patronising but you are really smart.

Can I understand from you what would be the cgt charge on the conditions of the above which I mentioned.

Original value at my father's death £140k

New valuation of market rate.. £190k..
.currently a mortgage on it of £113k buy to let mortgage.

Deed of variation done by mom to me and my wife...

What would be cgt on this please..

Thank you sir.

[maths]

Assuming the property was under the DoV re-directed to you and your wife equally the base cost for each of you for CGT would be 70k.

On sale 95k each.

Capital gain for each of you 95k - 70k = 25k less annual exempt amount 12,300 = 12,700.

As property rented no residence relief.

Gain taxed at 18% and/or 28%.

Mortgage doesn't affect CGT.