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In March 2000 our parents transferred their bungalow over into

Resolved Question:

In March 2000 our parents transferred their bungalow over into me and my brother’s names.
Sadly our parents are now deceased and we sold the property earlier this year for £230,000.00 and after expenses received a 50/50 split.
Are we liable for capital gains tax even if their will (dated 1991) states that we should split everything equally?
If we are liable for capital gains tax, is it on the whole amount or the difference between the market value at March 2000 and February 2014?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
Before i can address your question I need to know if this bungalow was ever your, or your brother's, sole or main domestic residence?
Customer: replied 2 years ago.

I'm afraid it wasn't. That's where the grey area comes in. That wasn't explained to us at the time by the solicitor.

Expert:  bigduckontax replied 2 years ago.
I am pretty sure that you will find that an old will's provisions as to equal splitting is over ridden by the gift of the bungalow to you at a later date. Wills are ambulatory [good word that] and often overtaken by events unless exceedingly well drafted.
Yes, you will be liable to CGT on the sale of this property, 50% each on the gain between the gift date and the sale date. Costs of sale may be deducted from the sale price for this computation. You are each entitled to an Annual Exempt Allowance of 11K and, if the bungalow was let out, then additionally Lettings Relief. CGT is levied at 18% or 28% or a combination of the two rates depending on your income including your share of the gain in the year of sale.
I hope I have shed some light on your problem, but not perhaps the better news for which you were hoping.
Customer: replied 2 years ago.

Thanks for that. So, if the will was at a later date (after 2000) what would be the situation then please?

Expert:  TonyTax replied 2 years ago.

I'm afraid that you are not entitled to letting relief as the property has not been the main home of you and/or your brother during your ownership of it. To qualify for that, a property has to have been both the owner's main home at some point and it also obviously has to have been let.

Take a look at HS283 here for information on letting relief.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15754
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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