Help understanding CGT for an inherited property I now live in

[nw80]

Hello,
My brother and I inherited my mum's house in 2020. We both lived abroad at the time. We changed it on land registry in 2022. I have lived here with my partner since returning to the UK a few months later in 2022. My brother also now lives in the UK. Neither of us own any other properties. Id like to try and buy the other half from my brother soon-ish. If I can't we will have to sell as my brother will need money to buy a house himself. I've only just seen about capital gains tax and am now worried what this means for both of us. Does anyone understand how it all works? I'll try and call HMRC on Monday.
thank you

How much is it worth? Do you have a double inheritance levy to apply? 1 million if you do 500,000 if not.

Maybe 220,000. We didn't have to pay inheritance tax

You’ll need some financial advice on this one. CGT isn’t payable on your own home (principal private residence) but as you only own half I guess the gain on the other half is taxable. Everyone can make up to £6k per year CG before tax is payable so I think it would only be due if the increase in value since you transferred in 2022 is more than £12k. Disclaimer I’m a bit rusty on tax so repeat - worth checking with a tax advisor.

If your brother does have to pay CGT then he will pay it on the amount his half has increased in value from when you inherited it off your mum

So if it’s worth 220, then his half is 110. Say it was valued at 180 when your mum died, then his half was 90, so he’s paying tax on the difference between 110 and 90 so tax on 20K capital gain.

Depending on his income level, capital gains on property is taxed at 18% or 28% . So thats somewhere between £3.6k and £5.6k. That doesn’t take into account tax-free personal allowances which would reduce the tax due by another £1k ish.

obviously this is just a rough illustration. But hopefully it gives you an idea.

You will have nothing to pay as you aren’t selling anything. If you live in the house as your only home then it is exempt from CGT.

I think if you don't sell as part of probate then you/your brother have to pay CGT but someone wiser will come along...hopefully me posting will give this a bump.

but...if you buy from him, do you have to pay Stamp Duty and he has to pay CGT?

Hi all, thank you for your replies. I messed up by posting twice and got a clear answer on the other thread that I accidentally deleted (I know, sorry, bit stressed and not thinking straight) - so think I know what I need to follow up with now either with HMRC or tax accountant. Thanks again

As it’s your main and only residence, why would there be CGT on your half? If it’s a second house for your brother, he would pay CGT on any profit on his half when that profit is realised. If you cannot buy him out and sell, that’s when there’s a profit. If it doesn’t increase in value, no tax. However you should be paying rent to your brother. Ask an accountant though.