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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4545
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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My Grandfather and my Aunt lived in a property in Farleigh

Resolved Question:

My Grandfather and my Aunt lived in a property in Farleigh Road, Warlingham.
• In his will my Grandfather stated that the property be shared 50% / 50% between my Dad and my Aunt and on the proviso that my Aunt could live there for as long as she wanted.
• My Grandfather died in 1999 and at that point, the property was valued at £110,000 for probate purposes (£55,000 / £55,000).
• When the property was in joint ownership between my Father and my Aunt, my Aunt made a will to state that her 50% share be split 50% each between myself and my brother (this was 7+ years ago) so the property ownership was now 50% / 25% / 25%.
• All other proceeds / assets that my Aunt owned (unless stated in the will) would then go to my Father.
• My Aunt died in February 2015 and at that point the property was valued at £320,000 for probate purposes (£160,000 / £80,000 / £80,000).
• We contacted a solicitor to help manage the estate whilst the probate was going through and also an estate agent with a view to selling the property.
• My Father paid for the majority of costs relating to the property or from the solicitor during this time.
• We sold the property in February 2016 for £400,000 (less approx £8,000 costs) and my brother and I received approx £98,000 each.
• My Father received approximately £196,000 from the sale of the property and approximately £78,000 for the remainder of her estate (£274,000 approx).
We know we have all made a capital gain on the sale of the property and have been given some guidance figures but it is in this area where we need your assistance.
Submitted: 1 year ago.
Category: Finance
Expert:  Rakhi Vasavada replied 1 year ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

Yes, it would be perfect to say that you all have made a Capital Gain as you inherited your property. Now, let me try and throw some light on the extent of your capital gain.

If you sell the property without having made it your own home, there could be CGT to pay, and this will be based on the increase in value between the date of death and the date when you sell.

Having said this, when your Aunt passed away in February 2015, the value of the property was 320,000 (160,000-80,000-80,000). This would form the basis of your calculation of Capital Gains Tax.

Now, you sold this property at 400,000 in February 2016. You will take into account NET Proceeds. i.e. 400,000 minus 8000 of costs, i.e. NET 392,000.

The DIFFERENCE i.e. 392,000 - 320,000 (Value at the time when you inherited the property) would attract the capital gains in the proportion of the amount received by you all three.

For example, So far as your father is concerned, it would be 196,000 minus 160,000 i.e. Capital Gain of 36,000. You received "X" amount from which you will deduct YOUR COST i.e. 80,000 from that and that will form your capital gain and so on.

The point I am trying to drive home is that you pay CGT when you eventually sell the home, and this will be based on the increase in value between the date they gave you the property and the date you sell.

CGT would be 18% in case if you are a standard rate tax payer or 28% if you are a higher rate tax payer.

I am sure this would help.

You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question.

Warm Regards,

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