CGT liability

[djprescott]

I am due to inherit some money from the sale of a property. Am I liable for capital gains tax?

[Hgrove]

I would have thought inheritance tax only, and then only if it's more than the threshold.  Anybody?

[djprescott]

Am I right in thinking that if CGT is payable it would only be calculated on the difference in value of the property on death to when it was sold? If the property has gone down in value does this mean no CGT is payable.

[Hgrove]

Well, yes, I think if the property has gone down in value, then there's no "gain" to tax! 

[Oneeyedtic]

Before a grant of probate can be obtained allowing the property to be sold the deceased's total estate will be valued and the executor must pay IHT on any amount above �263000. Below �283000 there is no IHT to pay. Your inheritance therefore comes to you with no further tax liability.

[djprescott]

Thanks for the answers. The property in question was owned by 2 individuals equally. My father died in Feb 2001 but because the property was jointly owned by his brother-in-law the property could not be sold and therefore the estate not wound up. My uncle died in August 2003 and both estates are now being wound up. I have a third share in the first estate and a fifth share in the second. Each estate is below the �283000 threshold, so does that mean there is no further tax to pay. Thanks for your comments. Dave.

[Oneeyedtic]

Sorry, there is a typo in my last answer - the threshold is �263000. Either way your inheritance comes to you with no tax to pay. If both estates are below the threshold there is nothing to pay, and if one or both are above the threshold then the executor(s) must pay inheritance tax out of the estate before they can legally dispose of anything, so again your inheritance comes to you with no tax to pay

[josieann]

I think you might have to pay capital gains tax.  All unearned income is taxable/

[djprescott]

But what is the defination of a 'capital gain'. Don't you have to have owned it in the first place. At the end of the day, I will never have owned the property, I will just be a beneficiary of the estates. 

[Oneeyedtic]

Your inheritance will have already paid tax, or been exempted from it, under the IHT rules that I have explained. Capital Gains tax applies to an entirely different set of circumstances which do not affect you in any way in this matter. Your inheritance is not taxed twice - if it was it would not be worth having, IHT is 40% and Capital Gains is 40% !! Any tax due on your inheritance must by law be paid by the executor, not you, and what you then receive is not subject to further tax.

[djprescott]

Thanks for the answer - that's quite clear now.