Capital Gains on inherited house

Capital Gains on inherited house

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A lady customer inherited a house jointly with her brother. Its value at the time was £80,000 and they also took over a £30,000 mortgage.
The house has been let for 2 years or so, and now they are selling it for £170,000.
What is the cost for CGT purposes? Is it £80,000, is it £110,000 because they had to pay out £30,000 to get complete ownership, or is it £50,000 because there was a liability attached to the asset.
Sounds a silly question but we are stumped!
Comments would be appreciated.
Trevor Green

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By susanna russell-smith
09th Aug 2004 17:47

It's £80,000 whichever way you look at it.
I presume the £80,000 was the unencumbered probate value of the house showing amongst the assets in the Estate Account and that the £30,000 mortgage attaching to it was shown separately amongst the liabilities. You could look at it as having a net realisable value of £50,000 on death, which you then increased by paying off the mortgage of £30,000 to arrive at an unencumbered value of £80,000.

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