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My sister and I are completing the sale of my late mother's

Customer Question

My sister and I are completing the sale of my late mother's house. What costs can be offset against CGT? For example, I have paid £600 for unoccupied buildings insurance and other costs have been incurred for selling costs e.g. conveyancing.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

There is no CGT on death, all assets being aggregated for Inheritance Tax (IT) purposes. Any intermediate costs would go through the executor's or administrator's accounts. IT kicks in at 325K and is at 40% flat rate on any surplus over that. If the deceased estate is below that then there is no IT to pay. The 325K is also inflated by any inter spousal, charitable or certain other bequests and also be inflated by any unused allowance from her late husband's estate, if any..

It is most unlikely that there will be any gain from sale against the probate value and as you suggest selling costs would top slice any gain anyway. If there is a gain it falls to the beneficiaries of your late Mother's estate subject to all the usual rules eg Annual Exempt Amount of 11K.

I do hope I have thrown some light on your position.

Customer: replied 2 years ago.

Thank you for that information. I think my question was too generalised. Our situation is that a value of £300,000 was declared for the house and passed through probate with all other allowances taken into account at that time. Subsequently it has been sold for £337,500 with a 50:50 split between myself and my sister. This means there is a perceived gain of £37,500 which is taxable. Am I right in thinking that we each get the CG allowance of £10,900 and that costs incurred during the past year, (i.e. insurance, council tax, utilities, agents and solicitors) can also be offset?

Expert:  bigduckontax replied 2 years ago.
Well, yes and no; there is a gain of GBP 37500, I assume that the sale figure quoted is net of selling costs (estate agents, solicitors etc fees). So you and your sister share that making 18750 each. Deduct your Annual Exempt Amount of 11K [14/15 tax year] leaves 7750 taxable at 18% or 28% or a combination of the two rates depending on individuals' income including the gain in the year of sale.
Unfortunately you cannot offset insurance, council tax or utilities from this gain for CGT purposes. Were the property let out then those items would be allowable against the rentals for Income Tax purposes.
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bigduckontax, Accountant
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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