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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: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 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

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

Customer: replied 2 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 2 years ago.

That's correct.

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

Category: Tax
Satisfied Customers: 4802
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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.

Best wishes...

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