CGT disposal of inherited property

Feb 1982 OP inherited 50% of house. Bought brother out 2015 .CGT liability on sale

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OP inherited 50% of mothers house February 1982. 100% Probate valuation £22,500. Bought brother out October 2016 for £ 187,500( 50% of  market value of £375000 on date of purchase) and living in the house until sale of ( £480,000 June 2024)  Brother paid CGT on his profit from the sale of his 50% share in 2016.

Advice please on calculations for CGT liability   

 

Replies (20)

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By FactChecker
16th Jun 2024 00:18

"living in the house until sale of ( £480,000 June 2024)":
- who was?
- since when?
- as principal or only private residence?

BTW your use of OP is confusing - on this site it means Original Poster (which in this case is you)! So are you the person for whom you're enquiring about CGT?

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Replying to FactChecker:
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By Wendy Craddock
17th Jun 2024 10:16

Living in house since October 2016. Only private residence since that date

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By Tax Dragon
16th Jun 2024 06:11

£480,000 - £(22,500+187,500) is £270,000.

There is not enough info to advise further, except that

- if you (and your spouse or civil partner if you have one) have lived in the property at all times since 1982 then there is probably no tax

- if tax is due it needs to be paid by/in August.

If you need more than this then I recommend you look at HMRC guidance and/or have a chat with a tax advisor.

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Replying to Tax Dragon:
By Ruddles
16th Jun 2024 16:23

Bearing in mind your remarks about the value of 50% of the property you should probably substitute 22,500 with 11,250 in your equation above.

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Replying to Ruddles:
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By Tax Dragon
16th Jun 2024 19:30

Oh yes. Misread it.

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Replying to Tax Dragon:
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By Wendy Craddock
17th Jun 2024 10:17

Living in house since October 2016. Only private residence since that date

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paddle steamer
By DJKL
16th Jun 2024 13:37

Is Feb 82 value equal to Mar 82 value?

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Replying to DJKL:
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By Tax Dragon
16th Jun 2024 14:53

It's unlikely that the value of the whole of a half a month after death equalled the value of a half of the whole on death.

I speak from experience rather than from training.

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Replying to Tax Dragon:
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By Wendy Craddock
17th Jun 2024 10:18

It appears the market value was higher March 1982 than probate value February 1982.

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By Paul Crowley
16th Jun 2024 16:27

You really need a chat with an accountant that can ask a bit more detail.
Chances are that if this is the only house that you and spouse have lived in as the principle private residence, then no tax due. Do not consider that to be advice.
My advice is chat to a local accountant. He could probably ask all the correct questions in less than an hour.
But if tax is due, it will take longer than that to get everything sorted.

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By Wendy Craddock
17th Jun 2024 08:06

I am the OP. I have lived in the house since 2016 It seems that the house was valued low at Probate due to IHT implications. Market value in March 1982 is higher than probate value.
House was occupied by a tenant on a regulated tenancy pre-Feb 1982 until 2015. House valuation at probate was for property as tenanted and not at vacant possession value
Brother reminded me that we can take into consideration that we originally each inherited one third of the property in 1982 with our sister who died in Feb 2001- and we then inherited her share between us- ie 1/6th share each( house valued at £42000 at probate 2001 with sitting tenant.)

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Replying to Wendy Craddock:
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By FactChecker
17th Jun 2024 08:54

For goodness sake (and certainly for your own) see a Tax Advisor and take paid advice on your specific circumstances.

That's 5 new pieces of information (not all relevant) that you didn't bother to provide originally ... it may that others appear when you are prompted by an Advisor, which is a good enough reason on its own to go the professional route.

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Replying to FactChecker:
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By Wendy Craddock
17th Jun 2024 10:14

Not a matter of 'didn't bother'. I simply hadn't previously thought it relevant for CGT as I had owned 50% of the property since 2015. My brother thinks that my liability for CGT might be less as I only owned 33% of the property before 2001.

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Replying to Wendy Craddock:
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By FactChecker
17th Jun 2024 12:02

As I said ... see a Tax Advisor and take paid advice on your specific circumstances.

In the nicest possible way, you're proving the relevance of my suggestion:
- it isn't relevant what your brother "thinks" (unless he's a tax adviser); and
- even if my "didn't bother" was harsh, you "simply hadn't thought it relevant".

A tax advisor knows what's relevant and will extract from you any factors that are - thereby avoiding the possibility of unknown unknowns.

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Replying to FactChecker:
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By Wendy Craddock
17th Jun 2024 23:12

You state "- even if my "didn't bother" was harsh, you "simply hadn't thought it relevant".
My response - I have never had to deal with capital gains tax before and am ignorant of what is relevant and what is not.
This is why I asked for advice on this forum.
I didn't realise that the solution was not just a simple maths equation .
It appears that in my simplicity I was entirely mistaken.

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Replying to Wendy Craddock:
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By Bobbo
18th Jun 2024 09:23

Wendy Craddock wrote:

I didn't realise that the solution was not just a simple maths equation .
It appears that in my simplicity I was entirely mistaken.

It essentially is a simple maths equation. The complexity comes in having all the variables that go into the equation.

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Replying to Bobbo:
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By FactChecker
18th Jun 2024 12:54

Indeed ... and then knowing the correct equation to use for the circumstances.

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Replying to Wendy Craddock:
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By FactChecker
18th Jun 2024 13:02

In most things in modern life, 'simple' is only truly simple either because you understand all the relevant aspects or through pure luck (which many people rely on).

I'm reminded of the puzzled look on the face of a friend's child (well young adult) a few years back ... saying "well I got *nearly* all of it right, didn't I?"
Unfortunately this was the reaction to the brand new car being towed away, due to having put petrol into the tank of (yes you guessed it) a diesel car.

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Replying to Wendy Craddock:
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By Software Seeker
25th Jun 2024 09:24

Wendy Craddock wrote:

You state "- even if my "didn't bother" was harsh, you "simply hadn't thought it relevant".
My response - I have never had to deal with capital gains tax before and am ignorant of what is relevant and what is not.
This is why I asked for advice on this forum.
I didn't realise that the solution was not just a simple maths equation .
It appears that in my simplicity I was entirely mistaken.

The best advice you've received from this forum is to go see an accountant. Case closed.

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Replying to Wendy Craddock:
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By Tax Dragon
17th Jun 2024 09:02

There is tax to pay. I do not know (and cannot calculate from that information) how much the tax is.

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