Capital Gains Tax - Jointly owned rental property sold after spouse's death

Capital Gains Tax - Jointly owned rental...

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A relation of mine owns a rental property that they jointly owned with their husband for about 7 years. Her husband passed away a month ago and she now wants to sell the rental property and the matrimonial home as she cannot afford to keep up the interest only mortgages on either property.

The rental property was purchased 7 years ago and the difference between the purchase price and potential sale price is around £15,000. I would guess the cost of purchase and sale would be around £3,000 and about £5,000 would have been spent on renovations and ongoing repairs.

The deceased took care of all of the rent collection and the widow is unsure as to whether he declared the property as rented or any rental income, which she believed probably just about covered the interest only payments with maybe £30 per month left over.

Based on those figures, would the widow have to report CGT and would she have any CGT to pay? This will all occur during the 2015/2015 tax year. Does she have to worry about the rent collected?

Thanks in advance for any responses, I know my relative would be extremely grateful for any assistance at this very difficult time.

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By johngroganjga
15th Apr 2014 10:37

You don't say, but I assume that the widow has inherited the deceased's half interest in the property.

When she sells her base cost will be half the original purchase price plus half the value at the date of the husband's death (as agreed for probate purposes).  Potentially half of any refurbishment costs could also be added in, but it would depend on the nature of the refurbishment.

Yes widow should be worried if she is not sure whether she and the deceased made proper declarations of rental income during his lifetime.  The executor should be able to clarify the position for her, as he or she will have to deal with the deceased's tax return up to the date of death. 

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By Macturner
10th Aug 2018 06:15

Would the widow in this case be able to claim CGT relief at both the point of sale and the point of transfer to herself, if this occurred apart 2 years apart?

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