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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
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My wife and I bought a flat as joint tenants (not tenants in

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My wife and I bought a flat as joint tenants (not tenants in common) in 1994. The flat has never been our PPR, nor has it ever been let. We have 'mirror' wills leaving all of our property to each other. What I want to understand is the potential CGT liability if, after the first death, the flat is subsequently sold by the survivor. Assume the flat cost £100k including acquisition costs, is worth £400k at time of first death and is subsequently sold for £500k net.
Secondly, would the situation be different if we owned the flat as tenants in common?
Thanks.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Your wife would inherit your share of the property at time of death with a a valuation of £400k. Her new base cost becomes (100/2)+(400/2) = £250k.

If the property is subsequently sold for £500k then her gain would be (500-250) = £250k.
It would make no difference to CGT calculations if the flat was owned as tenants in common.
Based on current year allowance and tax rates, her potential CGT liability would be no higher than £67k. Here are some examples

Tax year 2013-14
Gains chargeable to CGT 250,000
Annual Gains exempt allowance 10,900
Chargeable gain 239,100
CGT calculation
If income after personal allowances is >£32,010
then CGT on gain is taxed at 28% £66,948
If income after personal allowances is less than
£32,010 then some gain will be taxed at 18%
and the balance at 28% - see example below
Assume income after allowances is £20,000
Chargeable gain taxed at 18% 12,010
Chargeable gain taxed at 28% 227,090
CGT £65,747

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

So if the flat was owned by just one of us, the base cost would be £100k or £400k, depending on who died first?

Expert:  taxadvisor.uk replied 3 years ago.
Thank you for your reply.

That's correct.


I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4943
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

I have no more issues at present, but will certainly contact you again if the need arises.


Regards, Nigel Reed.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you.

Please do not reply to this message.

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