Capital Gains on inherited property

[BaileysBreakfast]

Any tax experts around? Trying to find out how much CGT would be payable on a (UK) property that was inherited 8 years ago but never valued at that time to my knowledge. How would the gain be calculated? It’s been rented out and has had substantial renovations, also £41K was paid to renew its lease since the inheritance. Thanks

There should have been an estimated value submitted for probate.

Ah ok thanks no memory of that but will see if I can find out how much that was

HMRC probably still have a record of the Form you have to submit to see whether IHT is due.

Yeah, it definitely should have been valued (even if only estimated) for probate, and that is the value HMRC will expect you to use.

As others have said you should use the probate value as the "cost" figure. You can add on costs of improvement since then (not repair) and the lease extension, including any stamp duty.

You can also deduct costs of selling the property like legal fees and estate agents costs.

The difference between these costs and your sales proceeds is your gain.

All individuals have an annual exempt amount (la Capital Gains personal allowance if you will) and any gain left over and above that will be taxed at either 18% or 28% depending on your other income.

The tax return has to be submitted and paid within 30 days of completion.

HMRC's website has a good cgt calculator - www.gov.uk/tax-sell-property/work-out-your-gain

Thanks all and slow reply as this isn’t something I’ve had time to think about again since I posted. I’ll look up the probate estimate when I get a chance. Does anyone know if the lease renewal is an allowable expense? One complication here could be that the lease meant the flat was not saleable at the time of inheritance- or at least no one could have got a mortgage on it, so the lease renewal has increased its actual market value by a lot! Hopefully the probate estimate didn’t take into account the fact the remaining lease was so low at that point…