This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Inherited property as nominated residence for CGT?

dc12345
Posts:2
Joined:Fri Jul 02, 2021 9:19 am
Inherited property as nominated residence for CGT?

Postby dc12345 » Fri Jul 02, 2021 9:32 am

Hello,

I am looking for some advice on my capital gains tax position if possible, specifically if I am now able to nominate my late fathers house as my residence before completing an upcoming capital gains tax return.

My situation is as follows :

I mainly live in my fiancée's house (with our child) & my current HMRC address is this address, however I do have any ownership of the house I live in.
My father passed away in October last year, leaving his house to my brother and I.
His partner (they were not married) moved out of the house 1 month prior to sale (May 2021).
The house was then appropriated by the solicitor (acting as executer) to the estate, my brother and I
We then sold the house for more than the probate value (June 2021), meaning CGT is theoretically due for the estate, my brother and I

My query though is whether I am now able to nominate my late fathers house as my main residence for the period from May 2021 to the point at which the house was sold (I was effectively also living there as there was a lot of work to do to make the house sellable) and therefore can claim exemption to capital gains as the house I have sold would be my main residence?

Any guidance would be much appreciated,

Many Thanks

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Inherited property as nominated residence for CGT?

Postby Jholm » Fri Jul 02, 2021 4:35 pm

Not worth it in my opinion. HMRC would likely have concerns over the 'quality' of the occupation and contest that it never become your main residence.

However by making the election, you might shoot yourself in the foot in the long run... the future sale of your main home would not attract full PPR due to the period being claimed as occupying the other property.

Also, given the short time elapsed, will CGT actually be due? If you have sold equal 50% shares, then the house must have sold for at least £26,600 more than it's recent probate value (since you both have a £12,300 allowance before CGT becomes payable).

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Inherited property as nominated residence for CGT?

Postby Jholm » Fri Jul 02, 2021 4:39 pm

Read this as you do have ownership of the house you live in.

If this was a typo and you don't have ownership, then it strengthens the argument but I still feel HMRC would not be satisfied with the quality of occupation. More so, it does appear that it would only be done for tax purposes and therefore, deny the claim.

They would expect to see actions such as post redirected, addresses changed, change of doctors etc etc etc... Hence why I use the term 'quality' of occupation, not length.

Either way, I would be surprised if tax is due based on the time elapsed between probate and sale.

dc12345
Posts:2
Joined:Fri Jul 02, 2021 9:19 am

Re: Inherited property as nominated residence for CGT?

Postby dc12345 » Fri Jul 02, 2021 4:56 pm

Hi both,

Many thanks for your replies.

Sorry yes there was a crucial typo in that i do NOT have any ownership of the house i live in.

The inherited house has sold for £100k more than the probate valuation (£520k sales price vs £425k probate value) - a product of it being a rather unusual house to try to value and the recent craziness of the market.

As suggested my concern is that nominating the house as my residence would be seen as a ploy and therefore not worth the risk.

Thanks

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Inherited property as nominated residence for CGT?

Postby Jholm » Mon Jul 05, 2021 9:20 am

I would personally question the valuation if it's gone up that much!

Then again, it's not unheard of to keep lower valuations at probate, since it can help with IHT.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Inherited property as nominated residence for CGT?

Postby pawncob » Tue Jul 06, 2021 5:30 pm

Was the proeprty sold bt Execs or by you?
If it was left to you £175k additional allowance for estate, which makes the estate Value £500k ((if no other assets) so IHT is due on c£20k which may be less than the CGT due.
With a pinch of salt take what I say, but don't exceed your RDA


Return to “Capital Gains Tax, CGT”