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In 1968 I bought a house for £ 8,000 jointly with my father.

Customer Question

In 1968 I bought a house for £ 8,000 jointly with my father. I sold the house October 2013 for £ 612,000 (after deduction of expences. I only lived in the house for the first 2 years.
My dependent parents lived in the house from March 1983.
My father died in April 1995 and left me his share of the house in his will.
My mother lived there until June 2013 when she was transferred to a residential home.
When I sold the house last year the deeds were in my name only.

Question: Am I laible to pay capital gains tax - if yes how much?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

We have an immediate problem here regarding occupation by a dependent relative. The rule is:

'The property must have been occupied rent-free and without any other consideration by the relative from before 6th April 1988. A dependent relative per s 226(6) TCGA 1992 may be either:

Any relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself or herself,

Or his or his wife’s mother who, whether or not incapacitated, is either widowed, or living apart from her husband, or a single woman in consequence of dissolution or annulment of marriage.
If the individual is a woman references to a wife should be read as references to a husband.'

So the only problem remaining at this stage is was any rent or any other consideration received? Once I know this I can frame an answer. Please be so kind as to advise.
Customer: replied 2 years ago.

Many thanks


 


I received no rent and paid all utility expences.

Expert:  bigduckontax replied 2 years ago.
For the periods of occupation by you and the time by your parents at no rent there is no liability to Capital Gains Tax (CGT). Thus possible exposure to CGT is limited to the time post 2013 and as the last 18 month's of ownership is ignored as is the year of sale you should have no liability to CGT on the gain made when you sold.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3119
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 2 years ago.

Does the fact that my father owned half the property until his death in 1995 have any bearing on the matter ?

Expert:  bigduckontax replied 2 years ago.

No, any tax due on death would have been included in his estate for Inheritance Tax (IHT) purposes and the matter long settled. Save in the cases of Potentially Exempt Transfers, which is not the case here, IHT liability does not cascade down to other parties.

Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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