Capital Gains Tax on part share of house

[Warmduscher]

I was left a one-sixth share in my parents’ house in 2008 when one parent died. The other parent remained in the house and has recently died themself. There was never an option nor desire to sell the house before now because the remaining parent was still living in it. My question is whether capital gains tax will be applied to my one-sixth share when the house is sold, to reflect the increase in its value since 2008. Thanks for any advice.

Yes it will. 1/6th of the increase in value from 2008, minus your tax free allowance of £3,000 (assuming you’ve not already used this on another capital sale this year), will be taxable.

ETA - I’m assuming you never lived there while you owned it?

Than you - that’s very useful. I lived there from birth until age 19, but have not lived there since.

Did you inherit it after you turned 19? If you ever lived there while you owned it, there’ll be some additional relief on the amount that’s taxable. If you lived there before you owned it, there won’t.

I’m assuming you have siblings who also own 1/6 each? The same rules apply to them, if they lived there while they owned it, they’ll get separate relief. You all have to calculate it separately, and can apply your own £3,000 allowance amount to your own 1/6 of the increase in value.

None of us lived there after the first parent died. Thank you

So no, none of us lived in the house after we inherited it.

Is this CGT applicable because you own another property (your home which you live in) or is it applicable because you never lived there?

It’s because it’s not her primary residence. It doesn’t matter whether she owns or rents her main house.
If she had lived at this house while she owned it it would reduce the amount by a proportion (eg a simplified version would be if you owned the house for 10 yrs, lived there for 5, you’d reduce it by half).

Yes it will.
You should be able to offset your proportion of any selling estate agents and legal costs against the gain and you may also be able to offset any legal costs when you acquired it. The probate charges on your first parents death should indicate the cost of dealing with the Land Registry registration. (You may not have actually paid those costs directly but they will have reduced your inheritance so may be considered to have done so).
There is a simple calculation on the HMRC website that you can fill in which calculates exactly how much you would owe. It has to be paid pretty quickly once it's due, 6 weeks I think.

I'm interested in this as I'm in the same position. My dad died in 2018 and left his half of the house to me and my sister, but with my mum having a life interest in that half whilst owning the other half. She's done all the maintenance on it, paid all the bills etc.

Mum is now in her mid 80s so is v likely to for within the next decade, whereupon my sister and I will inherit her half, assuming it hadn't been used for care home fees. The house isn't worth enough to be subject to IHT. I hadn't considered the CGT aspect though.

If mum dies tomorrow, will I have to pay 1/4 of the value of CGT? Id assumed that, because it was an inheritance, it wouldn't count for CGT, only towards the IHT limit, which it's way below.

A life interest trust has different rules. You’d need to check but if set up as a trust, you may not have CGT to pay on the increase in value between your father’s death and your mother’s.

Thanks for all the replies and info - it’s all really useful 😊