Capital gains on inheritance

[Ticktockk]

The house was originally bought circa 1960.

It was the only owned property of the deceased (they rented their home) but not their primary residence.

Will the person who inherits have to pay capital gains as well as inheritance tax?

The house is worth about 650k I imagine. I’m just wondering if there is any chance in hell the house can be kept.

The person who inherits would not pay CGT unless they sold it & it would only be charged on the gain made from when inheriting it & selling it.

Re inheritance tax it may not be due. Was it the main home? Was the person who died married? Is it been left to their child?

They will pay inheritance tax when they inherit the property. They will only pay capital gains tax if they then sell it. They will be deemed to have purchased the property at market value when they inherited it so if they sell in the future the capital gains tax will be calculated on the difference between this and the pri e they sell it for.

Some tax reduction measures could also be possible with an accountant

CGT not chargeable unless the person who inherits sells it and it is subject to a gain in value.

Re: inheritance tax. This depends on the value of the estate and whether the property was their main residence. Also whether they were widowed before they died, and when their spouse died.

The estate pays the inheritance tax, not the beneficiary. Of course, that could amount to the same thing.

If the beneficiary wants to keep the property and has inherited it all, unfettered, then somehow the estate needs to pay the IHT on the value given for probate. CGT may be due later if sold, on any gain. Unless you live in it and make it your main residence for however long it is that you would need to.

CGT is lower than IHT, currently, and IHT has quite big nil rate bands, the sum of which can add up to £1m. CGT nil rates bands are quite low now I think (I've never been troubled by it).

ahhhh I had stupidly thought you have to pay cgt on the amount it increased from when originally purchased. I’m an idiot. That makes MUCH more sense.
There will be inheritance tax to pay as it has not been left to a direct descendent. The person who lives in the house now would be the beneficiary, and is hoping to remain.

Thank you all!

Have you ever inherited any money? The theory is that the estate pays the inheritance tax but this is not how it works in practice. Probate is not granted until all the tax is paid or an arrangement is made with HMRC for paying tax on property in instalments. If it is a large bill the beneficiaries are expected to take out loans to pay the tax before they get their money from the estate.

Yes, I'm currently dealing with my mother's. And the estate did pay the inheritance tax before I got probate. I appreciate that was because there was enough cash in the estate and there isn't always.

Also, if you read my actual words I did say "this amounts to the same thing", recognizing that the beneficiaries are the ones that the tax Impacts even though the estate technically pays it.

The beneficiaries don't take out loans, executors do. There is a special loan for it that you can get. It's not ideal, but it's not the end of the world.

But, since this thread is from 2023, I can't understand why you're rehashing it.

I’m rehashing it because the stupid MN algorithms brought it up after I commented on another thread. I do wish they wouldn’t do that. When I press “active” I expect the threads that come up to be exactly that and forget to look at the date. Anything about inheritance winds me up because I have had such terrible experiences. Huge tax bills, family disputes, delays in getting what was due to me etc. It has caused me alot of stress at a time when I was grieving first my parents, then my in-laws. That’s why I call inheritance tax a cruel tax.