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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Left a property in a mothers will in 1996 value £90,000. House

Resolved Question:

Left a property in a mothers will in 1996 value £90,000. House occupied by a person who paid no rent and no income was derived. What would the tax liability if the property was sold at its present value of £150,00 ?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Has the property been your main home at any time during your ownership of it? Have you made any improvements? If so, what did they cost? What is your annual income before tax?
Customer: replied 3 years ago.

no it has not been my home only that of the relative occupying the property since my mothers death in 1996. It has been well maintained at the occupier's cost .but not "improved" (it was built in 1910 ish).
My income ( I am retired) is £18,000 per annum.

Expert:  TonyTax replied 3 years ago.
Thanks.

Can you tell me what your date of birth is, given that you are retired, as that will determine the amount of the personal allowance you are entitled to?
Customer: replied 3 years ago.

21/12/1944

Expert:  TonyTax replied 3 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 3 years ago.
Hi again.

If you sell the property after 5 April 2014 for £150,000 having inherited it with a probate value of £90,000 in 1996, you will make a gain of £60,000. The first £11,000 will be exempt so you will be left with a taxable gain of £49,000.

There are two rates of CGT, 18% and 28%. The rate or combination of rates you will pay will be dependent on the level of your income in the tax year of disposal of the property.

Your income is £18,000 per annum. You will be entitled to a personal allowance of £10,500 for 2014/15 so you will be left with taxable income of £7,500. That will use £7,500 of the 20% tax band which covers the first £31,865 of taxable income so you will have £24,365 of the 20% tax band to use against your taxable gain.

You will pay CGT at 18% on £24,365 of the gain (£4,385.70) and at 28% on £24,635 of the gain (£6,897.80) leaving you with a CGT liability of £11,283.50 payable on 31 January 2016.

I hope this helps but let me know if you have any further questions.
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