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Where Taxpayers and Advisers Meet

Capital Gains on Inherited Property

Fishol
Posts:4
Joined:Wed Aug 06, 2008 3:04 pm

Postby Fishol » Mon Aug 18, 2003 5:41 am

I have recently inherited a house in my father's will. The house is in need of modernisation and needs about £15,000 spending on it to bring it up to a decent standard to sell.I do not intend to live in it as I already own a home with my wife.

If the house is valued say at £70,000 for probate purposes because it is in poor condition and I spend money on it to do the repairs etc, am I liable to CGT if the property sells for £100,000?

Nigel Lord
Posts:518
Joined:Wed Aug 06, 2008 2:18 pm

Postby Nigel Lord » Mon Aug 18, 2003 8:11 am

Fishol

You would be liable to CGT on the gain (after probate value and improvement expenditure). You could improve the position by gifting a proportion of the beneficial interest in the property to your wife and using the inter-spouse exemption. This would maximise the use of her unused annual exemption and lawer/basic rate bands.

Please lat me know if you require assistance in making a deed of gift.

If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk

Fishol
Posts:4
Joined:Wed Aug 06, 2008 3:04 pm

Postby Fishol » Mon Aug 18, 2003 11:03 am

I am also thinking of emmigrating next year and would be selling my own property.

How does this scenario work to escape the dreaded CGT: I sell my current home and move into my fathers house during the improvements thus transferring my PPR exemption, then when I'm ready to emmigrate to the US, which should be about next March I would have potentially lived in it for about 4 months.

Nigel Lord
Posts:518
Joined:Wed Aug 06, 2008 2:18 pm

Postby Nigel Lord » Tue Aug 19, 2003 2:41 am

Fishol

If you genuinely move to you father's house and, either sell your existing residence or make a PPR election, you should have solved your problem (but only if you dispose of your father's house within 3 years of its acquisition). If you retained your father's house after emigration, but continued to be liable to UK CGT (i.e. did not become not-ordinarily resident) you would have some (limited) CGT exposure.

You should also beware of becoming liable to US tax if you dispose of UK assets when US resident.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk


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