Hi all , My apologies for what might seem a simple question but I have been out of the personal tax game for several years and I wanted to help my mother with some planning and got myself a bit confused with HMRC site and some other similar questions here which may or not apply.
My mum has lived in her current house since 1980 , no breaks. She inherited a flat from her mother Oct 3rd 2009 , which was briefly lived in by my brother but has remained mainly empty as she has not brought herself to deal with it. ( the value has increased on the flat since purchase in 1997 by approx 250k but my mum was put as joint owner back in 1997) My dad (they were married) died October 2nd 2017 ( this year) and so she is now looking at her options - especially as the size of house she is currently in is far too big ( this property has increased in value by 500k since pyrchase)
My thoughts were as follows regarding using the tax relief on main residence to her advantage?
- if she now sells the flat and continues to live in her house , she will have to pay tax on the sale of the flat
-if she sells the house and the flat both now then she will have to pay tax on the sale of the flat but not the house
-if she moves into the flat and then sells the house within 3 years she will not have to pay any tax on the sale of the house, and then as long as she lives in the flat for another 3 years after the sale of the house then if she sells the flat that will be free of tax too
I would appreciate anybody confirming my thoughts or perhaps if I am completely wrong to correct me please!! If there are any better suggestions then I'd be happy to hear them too.
many thanks to all
Kevin
Replies (7)
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Presumably (you don’t say) she inherited your late father’s share of the house. She will not pay any tax on the sale of the house if she sells it within 18 months (not 3 years - that’s the old rule) of moving out.
Any gain on the flat attributable to the period from October 2009 to the date she moves in (if she does) will be taxable (subject to annual exemption) regardless of what she does in future.
Sounds from the OP like half of the flat gain is chargeable from 1997 and the other from 2009 with Probate value uplift.
Moving in might get some PPR relief, but beware intention on doing so.
You say she was joint owner from 1997 and the other owner was apparently her mother, who died in 2009 and whose share of the property would be an addition for your mother at the probate value for 1/2 share in her mother's estate
Kevin,
you are out of date and incorrect in places
Living in a property with the intention to sell wont help your mum, and nor is it a magic wand for the past.
See an accountant who deals with property tax, it wont cost that much, should be well under £500 to get some decent planning from here.