Capital gains tax

[scorpiogirly]

Can someone please help with this? My stepfather recently passed away and left a house of which I inherited half. My solicitor has told me that I will need to find an accountant or financial advisor and the tax bill needs to be paid within 60 days. The house sold for 140k and I will be receiving just under 64k. Does anyone know what the tax will be on this?

I have also read that the capital gains tax applied to the increase in the value of the house between when the owner passes away and when it is sold. Is this correct?

It's easy. It took me about 20 mins online and you can do it yourself.

Hi OP,

To work out the tax you need to take your half of the proceeds, deduct your half of any sales costs (legal and estate agents fees), deduct half the probate value of the house. Assuming you haven’t made any other capital disposals you can then deduct an annual exemption (£12,300). Even though you only are selling half the house you still get a full annual exemption.

The figure that is left is then taxable at 18% up to the limit of any available basic rate band and 28% on anything above that.

The form is easy enough to fill out online but needs to be done within 60 days of completion.

It's the difference between the valuation for probate and the actual sale price. You need to set up a government gateway account and search for capital gains tax.
My top tip is to make sure you have all the information on hand.
You will need all the dates, estate agents costs, solicitor costs etc (your share so remember to divide them by the number of people inheriting)
You need to know your total income for the tax year including salary, interest on savings etc.
To give you an idea of what CGT costs, I am paying just over £4.7k on a capital gain of £36500

The inheritance e tax threshold is £325,000 for one person or £650,000 for a couple ( plus an allowance for PPR )

Capital gains allowance for an individual is £12,300
Was the property valued for probate purposes?
Was the profit in the sale of your half more than £12,300 ?

HI scorpiogirly - If your stepfather's entire estate (everything he owned) was under £325k when the tax bill on this should be nil. I believe IHT is only liable here as appose to CGT, unless the property sky rocketed in value between his death and selling the property.

Hi OP, yes you won't necessarily have to pay CGT. What was the house valued at for probate, and what did it sell for? Sometimes you need to pay CGT on the difference (or your share of the difference), but costs like solicitor fees and some repairs can be deducted from the amount. Your own annual earnings are also taken into account and there is also an annual deductible amount anyway that is disregarded.

This website has a calculator: taxscouts.com/calculator/capital-gains-tax/

It is also unlikely that you will have to pay Inheritance Tax, depending on the size of his estate. The executors of the estate pay it, before distributing funds. Sorry about your stepdad

Thank you all.

The mortgage on the property was paid off some years ago. He and my mother then took out a 30k mortgage for renovation in 2013. There is 8k remaining on that which will be deducted from the proceeds. I am not sure if the 30k spend on renovating the property can also be deducted from the final selling price.

The house was sold for 140k. After all fees and mortgage etc I will be getting just under 64k.

I work part time at the moment as my daughter isn't yet in school so I don't pay tax on my wage, not sure if this will make a difference.

I don't know if the house was valued for probate, but if it was, i can't imagine there would be that much difference between that and the final selling price of that makes sense?

Hi, find out what the house was valued at for probate, as it is the difference in that, and selling price that potentially triggers CGT. I think you won't have to pay it, even if the house sold for slightly more than it was valued at.

The calculator I linked to yesterday also shows what expenses you can take off, and calculates it based on your earnings. I found it really helpful.

@scorpiogirly

Thank you all.

The mortgage on the property was paid off some years ago. He and my mother then took out a 30k mortgage for renovation in 2013. There is 8k remaining on that which will be deducted from the proceeds. I am not sure if the 30k spend on renovating the property can also be deducted from the final selling price.

The house was sold for 140k. After all fees and mortgage etc I will be getting just under 64k.

I work part time at the moment as my daughter isn't yet in school so I don't pay tax on my wage, not sure if this will make a difference.

I don't know if the house was valued for probate, but if it was, i can't imagine there would be that much difference between that and the final selling price of that makes sense?

Surely if you spent £30k on renovating, the house will have increased in value by at least £30k if not £50k?

@Alwayscheerful - CGT is payable (sometimes) on the difference between the worth of the house when the person died, and how much it sells for later. Not how much it was worth when it was first bought.