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Where Taxpayers and Advisers Meet

CGT on property inherited with residence clause

theredimp
Posts: 2
Joined: Mon Feb 11, 2019 9:23 am

CGT on property inherited with residence clause

Postby theredimp » Mon Feb 11, 2019 9:34 am

My wife inherited a residential property from her mother a few years ago with a clause in the will that her stepfather (who didn't own any part of the property) be able to live in it rent free until his death. We were renting a property elsewhere and didn't own any other property. Upon his death last year we moved in and it has been our only residence ever since. We are thinking of relocating due to work but are concerned about a CGT liability for the period from inheritance to moving in. Is there any relief she can claim other than PRR for the last 18 months, especially to cover the period when she owned the property but was not able to live there because of the clause in her mother's will? There doesn't appear to be any guidance around to cover this specific circumstance.

AGoodman
Posts: 881
Joined: Fri May 16, 2014 3:47 pm

Re: CGT on property inherited with residence clause

Postby AGoodman » Mon Feb 11, 2019 11:32 am

Stepfather would have had a qualifying interest in possession with the result that:

(a) the property formed part of his taxable estate for IHT (it may still have been below the relevant thresholds for actual liability), and
(b) the property receives a tax free uplift for CGT on the date of his death.

This effectively means that you are treated as owning the property since his death and receiving it for the market value at that time. By the sounds of it, CGT should not be a problem on sale.

theredimp
Posts: 2
Joined: Mon Feb 11, 2019 9:23 am

Re: CGT on property inherited with residence clause

Postby theredimp » Tue Feb 12, 2019 12:08 am

Thank you for this information. I was sure that there would be something that covered this particular circumstance. It also explains why the solicitor dealing with my wife's stepfather's estate was so interested in the value of the property at the date of his death.


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