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CAPITAL GAINS TAX ON INHERITED PROPERTY
13 Answers
My wife's sister died leaving my wife a bungalow which is now being sold for £330,000 the property was valued at £325,000 will she haave to pay capital gains tax and if so how much.
Answers
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Capital gains tax will not have to be paid but there may be a liability for inheritance tax but this will depand in the overall size of the estate,
Was she married at any point. In that case no inheritance tax would be payable unless the estate value is above £650,000 assuming all the husbands assetts went to her.
If she was never married then 40% inheritance...
Was she married at any point. In that case no inheritance tax would be payable unless the estate value is above £650,000 assuming all the husbands assetts went to her.
If she was never married then 40% inheritance...
08:30 Mon 09th Apr 2012
Capital gains tax will not have to be paid but there may be a liability for inheritance tax but this will depand in the overall size of the estate,
Was she married at any point. In that case no inheritance tax would be payable unless the estate value is above £650,000 assuming all the husbands assetts went to her.
If she was never married then 40% inheritance tax will have to be paid on all assetts above £325,000 so of say the overall size of the estate was £425,000 £40,000 would be payable.
Do not forget to deduct expenses. I would imagine the selling expenses would come to £5,000 plus so if this was the only asset then no inheritance tax would be payable even if she was never married.
Was she married at any point. In that case no inheritance tax would be payable unless the estate value is above £650,000 assuming all the husbands assetts went to her.
If she was never married then 40% inheritance tax will have to be paid on all assetts above £325,000 so of say the overall size of the estate was £425,000 £40,000 would be payable.
Do not forget to deduct expenses. I would imagine the selling expenses would come to £5,000 plus so if this was the only asset then no inheritance tax would be payable even if she was never married.
My mother passed away in 2003 and as the house was worth about £480,000. My mother and father split the ownership into Tennants in Common in 1995 so My father owned £240,000 and my mother owned the other £240,000.
When my mother passed away I inherited half the house and got the other half when my father passed away in January.
At that time if she had left the house just to my father inheritance tax would have been payable on amounts above £325,000 when the house came to me.
As a result of my parents actions no inheritance would have been payable as I inherited £280,000 from my father and £280,.000 from my mother.
This changed later so a married couple could leave £650,000 and the estate would not be liable for inheritance tax.
This was backdated regardless of when the spouse died.
This was fair as assetts are normally transferred to the spouse within marriage and to the children when the last parent passes away.
In our case however my father was taken into a nursing home and was NHS funded.
If this had not been the case if my father had been the owner of all of the house all of it could have been taken for care fees.
As I owned half of it none could be taken as my fathers half was worthless as I owned half of it and had the right to occupy the house so it is worth a husband / wife leaving half the house to the children on the first death.
When my mother passed away I inherited half the house and got the other half when my father passed away in January.
At that time if she had left the house just to my father inheritance tax would have been payable on amounts above £325,000 when the house came to me.
As a result of my parents actions no inheritance would have been payable as I inherited £280,000 from my father and £280,.000 from my mother.
This changed later so a married couple could leave £650,000 and the estate would not be liable for inheritance tax.
This was backdated regardless of when the spouse died.
This was fair as assetts are normally transferred to the spouse within marriage and to the children when the last parent passes away.
In our case however my father was taken into a nursing home and was NHS funded.
If this had not been the case if my father had been the owner of all of the house all of it could have been taken for care fees.
As I owned half of it none could be taken as my fathers half was worthless as I owned half of it and had the right to occupy the house so it is worth a husband / wife leaving half the house to the children on the first death.
Quoted from Landmann: "This changed later so a married couple could leave £650,000 and the estate would not be liable for inheritance tax. This was backdated regardless of when the spouse died."
This is misleading; what you mean is that the date of the first to die was irrelevant as to whether two lots of IHT nil rate band could be claimed by the estate of the second to die within a marriage.
Trying to answer one question by giving chapter-and-verse of another different scenario isn't very helpful. Perhaps best to stick to the generic law on the subject.
This is misleading; what you mean is that the date of the first to die was irrelevant as to whether two lots of IHT nil rate band could be claimed by the estate of the second to die within a marriage.
Trying to answer one question by giving chapter-and-verse of another different scenario isn't very helpful. Perhaps best to stick to the generic law on the subject.
Hi buildersmate
You said ''Quoted from Landmann: "This changed later so a married couple could leave £650,000 and the estate would not be liable for inheritance tax. This was backdated regardless of when the spouse died."
This is misleading; what you mean is that the date of the first to die was irrelevant as to whether two lots of IHT nil rate band could be claimed by the estate of the second to die within a marriage.
Trying to answer one question by giving chapter-and-verse of another different scenario isn't very helpful. Perhaps best to stick to the generic law on the subject''.
I did mention this as one of my relatives was widowed in 1989 and never got married again.
Assuming the house was not owned on a tennants in common basis then no inheriance tax would be payable when she passes away even though the husband passed away before the rules changed.
The house she owns is worth about £450,000 so unless her assetts come to more than £650,000 no inheritance tax would be payable as long as none of the assetts were passed to anybody else at the time of the husbands death.
This could have happened to Bob's wife sister,
You said ''Quoted from Landmann: "This changed later so a married couple could leave £650,000 and the estate would not be liable for inheritance tax. This was backdated regardless of when the spouse died."
This is misleading; what you mean is that the date of the first to die was irrelevant as to whether two lots of IHT nil rate band could be claimed by the estate of the second to die within a marriage.
Trying to answer one question by giving chapter-and-verse of another different scenario isn't very helpful. Perhaps best to stick to the generic law on the subject''.
I did mention this as one of my relatives was widowed in 1989 and never got married again.
Assuming the house was not owned on a tennants in common basis then no inheriance tax would be payable when she passes away even though the husband passed away before the rules changed.
The house she owns is worth about £450,000 so unless her assetts come to more than £650,000 no inheritance tax would be payable as long as none of the assetts were passed to anybody else at the time of the husbands death.
This could have happened to Bob's wife sister,
Yes, I know about principal private residences and second homes. Indeed I regularly provide information on this subject in this forum. I am merely correcting your factual errors and generalisations on what is a complex subject.
You said "No [capital gains tax or] inheritance would be payable in respect of the house as it was the wife's sisters main residence". That is patently wrong in regard to IHT as a reason for not having to pay it - though it is correct, as you keep pointing out, when it comes to liability to pay CGT on a gain from a second home.
I don't propose to keep a dialogue going on this any further.
You said "No [capital gains tax or] inheritance would be payable in respect of the house as it was the wife's sisters main residence". That is patently wrong in regard to IHT as a reason for not having to pay it - though it is correct, as you keep pointing out, when it comes to liability to pay CGT on a gain from a second home.
I don't propose to keep a dialogue going on this any further.
Landmann seems intent on answering questions that have not been asked and have no relevance here. Yes, no CGT would be payable had the sister sold it before she died as she lived in it. However she didn't so what relevance bringing that up now has I have no idea. Given that's Bob's wife didn't live there CGT is certainly possible (though it would appear insufficient gain has been made for any to be paid).
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