Capital gains on inherited property sold

Inherited house, step mother had right to live in. She has now died so selling. Is CGT due?

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I had no IHT to pay on death of father as house only £175k. Step mother had right to live in. She has now died and I am selling house for £280k 8 years after inheriting. I have had no income or benefit from house in last 8 years. Do I still have to pay CGT on £105k gain? If I was inheriting it now I would have no IHT to pay so doesn't seem right. Can I redo IHT return? If I do have to pay then can I deduct all empty property bills (CT, gas,elec,empty property insurance etc) that I have incurred while trying to sell?

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By DRMJOB
18th Nov 2018 15:04

On the assumption that stepmother occupied the property as her main residence under a legal right granted by her husbands will I would opine that s. 225 TGA 1992 applies to exempt the gain on the property owned by the son the owner of the property since his father died. Had there been CGT due then no relief would be available for the Revenue expenditure on CT etc. The period since stepmother died is not specified but presumably covered by the current last eighteen months exemption

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panda ketteringUK
By ketteringUK
18th Nov 2018 15:17

Do you offer pro bono advice on a regular basis? :)

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Replying to DRMJOB:
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By dcorke
23rd Nov 2018 22:42

Just had a look at s225 and it says trustee. I wasn't a trustee just the beneficiary, but Step mum lived there for last 8 years. I left home in 1984 and she moved in a year later. House was left to me when he died but she had right to live there.

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Replying to DRMJOB:
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By dcorke
23rd Nov 2018 22:42

Just had a look at s225 and it says trustee. I wasn't a trustee just the beneficiary, but Step mum lived there for last 8 years. I left home in 1984 and she moved in a year later. House was left to me when he died but she had right to live there.

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By Tax Dragon
24th Nov 2018 00:17

Who were dad's executors? Fair chance they were also trustees.

Who are stepmum's executors? Fair chance they'll need to include the property as part of any IHT return for her.

Less of a fair chance that s225 is of any relevance, but it does depend on the facts. Get someone that knows about this stuff to give dad's will the once over. Us lot are just trying to out guess each other.

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panda ketteringUK
By ketteringUK
18th Nov 2018 15:15

In the last 8 years you were gaining £250 each week, thanks to your father's hard work and generosity.
Surely you can spend £150 and make an appointment with a certified accountant in your area???

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Replying to ketteringUK:
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By dcorke
23rd Nov 2018 22:48

Sorry but I thought the whole point of this section was to ask each other's advice. I'm a public sector capital accountant not a tax specialist.

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By Wall1690
19th Nov 2018 16:27

As I read it, the property was occupied by the step mum - following the father's death.

If the son didn't live there in that period, presumably he won't get PPR on the gain?

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Replying to Wall1690:
paddle steamer
By DJKL
19th Nov 2018 18:06

IIP?

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paddle steamer
By DJKL
19th Nov 2018 18:09

Did you inherit it 8 years ago?

Did your late father's will leave your Stepmother with a life interest in the property?

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Replying to DJKL:
RLI
By lionofludesch
19th Nov 2018 18:58

DJKL wrote:

Did you inherit it 8 years ago?

Did your late father's will leave your Stepmother with a life interest in the property?

I agree. We might not have the full facts here.

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Replying to DJKL:
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By dcorke
23rd Nov 2018 22:28

I inherited the house 8 years ago but Dads will said his wife had right to live there for the rest of hers.

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By DJKL
24th Nov 2018 18:02

In that case she likely had an Interest in Possession , in effect there was a trust. As such the CGT bill is possibly based upon increase in value only from her date of death and if there a CGT liability it is that of the trustees.

There may be IHT re the IIP in your stepmother's estate that will need dealt with.

Speak to the solicitors who dealt with your father's estate as a starting point.

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By Tax Dragon
24th Nov 2018 19:52

There is a risk that there is only a deemed trust and the deeming provision exists only in IHT law. You would hope that whoever advised your Dad knew what they were doing, because the tax outcomes of deemed and real trusts are very different.

I hope your Dad was not so stupid as to self-advise - even if he did find the excellent resource that is AccountingWeb Any Answers to help him out.

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Replying to DJKL:
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By Tax Dragon
24th Nov 2018 19:53

Sorry DJKL, I didn't mean YOUR Dad!

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By DJKL
25th Nov 2018 12:44

My Dad certainly did know what he was doing re trusts, they were a core part of his legal practice, catch was most of what he knew revolved around CTT and Estate Duty ( he retired when IHT was introduced) and he died in 2012.

Luckily the IIP he created in his will was fine, catch is the sum involved was eroded in real terms by inflation so managing in a cost effective way is pretty challenging.

We are using his ex partner who rather modestly charges the trust just £150 plus vat per year (mates rates) for its ongoing management with myself making the investment decisions, but when he retires (well into his 60s now) I can see myself having to deal with the day to day management as the trust just does not have the income to justify "proper" fees.

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Replying to DJKL:
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By Tax Dragon
25th Nov 2018 21:07

There you go. I definitely did not mean your Dad. He created a trust [with all the issues that brings]. The OP's Dad may well not have done that, as a right to occupy is not of itself an IIP. (A professionally drawn Will would likely create a trust, as solicitors like trusts; a homemade Will would likely not do so.)

The OP should do as I have suggested - see someone. Your suggestion of who that someone should be - the solicitor that dealt with the Estate - might be the best candidate. If there is no such person, a local firm that deals with Wills and Estates might be just as good.

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