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TaxRobin
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Hi, wonder if you can help? My Mother & Father lived in a house

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Hi, wonder if you can help? My Mother & Father lived in a house for over forty years together, it was originally a council property but my mother inherited some money from her brother and she then purchased the house for £30,000.00. When my Mother died in 2005 my Father stayed in the property until 2012, he then moved in with another partner (which the partner owns outright) and he let his property up until now. He is thinking of selling this property , will he have to pay any capital gains tax.

Thank you
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
Normally Capital gains tax is payable when you sell a buy-to-let property at a profit. It isn't payable if you make a loss.
If you sell inherited assets which have gone up in value since the person died you have to pay capital gains tax.
Your father will be allowed the private residence relief as long as he was not outside the home for more than 18 months before he sold.
As your father may not meet that requirement, he would still have the Letting Relief to rely on.
The maximum amount of Letting Relief due is the lower of:
£40,000
the amount of Private Residence Relief due
the amount of gain you've made on the let part of the property

Depending on the price he gets for the property if sold, he may have enough letting relief to pay no capital gains tax.
Customer: replied 2 years ago.
hi, sorry just to clarify, property will probably sell for £325,000, he has not lived in property for over two years, and has received £1200 per month rental income for this time, could you give an approx amount he may have to pay
Thanks
Expert:  TaxRobin replied 2 years ago.
He will pay on the amount that is over his cost (less his letting relief).
For him that will be the market value when he inherited the property. So that amount and the difference in the sell amount will be the taxable portion.
You need to advise him that first he must find out the market value in 2005.
If that was (for example) £300,000 and he sells for £325,000, his gain is £25,000. This then would be covered by the letting relief and he would not have any capital gains tax to pay.
TaxRobin, Tax Consultant
Category: Tax
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Experience: International tax
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