Capital Gains tax on inherited property

[Holdy]

In 2014 I inherited a property, left to me 'upon trust', valued at £249,950 from mother. My stepfather lived in the bungalow and had a life interest in the property. 2018 he married someone else, moved her in and contested my mother's Will. After mediation, we reached an out of court settlement of £125,000 and he moved out recently.

I am in the process of selling the property for £285,000. I have been told I will have to pay CGC even though my stepfather walked away with half the inherited value. Is this correct? if so can I offset my selling fees, council tax and any repairs against CGC and I assume I get the CGC personal allowance. I am employed on PAYE earning £30k per annum.

[jerome.lane]

Costs securing a legal right over an asset are generally allowable costs of disposal. I would suggest that you either inherited at probate value with an allowable cost of £125,000 plus any legal fees creating a loss of some £90k, or you inherited at £125k and have a circa £35k gain to pay CGT on. If you're married, you can maximise CGT annual exemptions by transferring half before sale. A review of the history and settlement by a professional should determine which approach is the one to adopt.

[maths]

It would seem that step father had an interest inn possession (iip) pursuant to mother's will with remainder to you on step-father's death.

Following mediation, step-father surrendered his iip for £125,000 and in principle precipitated a CGT charge on the trustees (but any gain should qualify for private residence relief (ie no actual CGT charge)). As remainderman, you acquired 100% of the property at market value at date iip terminated.

On sale you are exposed to a CGT charge on difference between this market value and the £285,000 (subject to private residence relief if you lived. in it).

[Holdy]

Thanks for your replies. So if I understand this correctly, he surrendered his iip on 2nd August and the property was valued at £300,000 a week later. I have accepted an offer of £285,000 so this gives me a loss of £15k, so no CGC to pay.