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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15753
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Good morning I hope u can help me my parents passed away in

Customer Question

Good morning I hope u can help me my parents passed away in 2011and I inherited there home. I gave up my council house which I rented of the council and moved into my parents home. I lived there for 3 years and recently I sold it. I was in a lot of debt that's why I sold it I bought a cheaper house and payed my debts of I have still got some money left over which is 10,000 my friend recently told me I will get done of the government because I should have payed capital gains tax I am now so scared I can't stop crying I don't get benefits as my husband is in full time work and I have 3 kids and I receive working and child tax credits. Please can u help me out thank u
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you tell me when exactly in 2011 you inherited your parents home, what it was worth at the time, when exactly you moved into it, when exactly you sold it and what you sold it for please. Was it owned by you alone or jointly with your husband?
Customer: replied 2 years ago.

My parents passed away June 2010 but I couldn't move in until may 2011 as we couldn't find deeds so solicitors had do loads of paperwork and stuff which took nearly a year soothe house was empty all that time.it was valued at 165, 000 I sold it for 175,000 and I moved into my new home on 26th of September of this year's the house was only in my name the same as this one

Expert:  TonyTax replied 2 years ago.
Thanks.

So are you saying that the house was worth £165,000 in June 2010 (the probate value) and that after you moved into it in May 2011, you lived in it until it was sold?
Customer: replied 2 years ago.

Yes that's right I lived in it with my family for 3 years

Expert:  TonyTax replied 2 years ago.
Thanks.

You have nothing to worry about. You normally get exemption from Capital Gains Tax for the period that you lived in what was your main home. The balance of the gain would be taxable with the first £11,000 being tax free due to the annual CGT exemption.

When you inherit a property the cost for CGT purposes is the probate value which in your case is £165,000 even though you didn't pay anything for it. You sold it for £175,000 so you made a gain of £10,000 which is less than £11,000 and so, assuming you make no other capital gains in the current tax year, you will have no CGT to pay. As it is, only about 10 months worth of the gain would be taxable and that is much less than £11,000.

Take a look at HS283 for information on the main residence and CGT.

I hope this has put your mind at rest but let me know if you have any further questions.
Customer: replied 2 years ago.

Thank u I bought my new home for 118,000 so it left me alot in the bank so I could get me debt free which I now have 10,000 does that not apply either

Expert:  TonyTax replied 2 years ago.

Assuming the information you gave me was correct, you are free and clear of the taxman. It was a good move to get yourself free of debt.

Expert:  TonyTax replied 2 years ago.
It's worth pointing out that any interest you may earn from putting the cash you have on deposit will be taxable subject to your personal allowance which is currently £10,000 per annum. Its likely that the interest will have tax deducted at source by the bank unless you have completed a form R85 to tell them that you are a non-taxpayer.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15753
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

What I need to now is will my tax credits stay the same or end my husband earns 14750 a year we get working and child tax credits and child benifet

Expert:  TonyTax replied 2 years ago.
Tax credits are based on income, not capital. The proceeds from the sale of a property are not taken into account in determining the level of tax credits you quailfy for. Take a look here for information on what is taken into account for tax credit purposes.
Customer: replied 2 years ago.

Thank you so much

Expert:  TonyTax replied 2 years ago.
Thanks.

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