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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4976
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I think I owe capital gains tax as I inherited my mother's

Customer Question

I think I owe capital gains tax as I inherited my mother's house (along with my sister) when she died. My sister and I did not agree on the division of the estate for a few years and in the end she bought me out - however in that time (3 years) the property increased substantially in value and she bought my half out at more than the valuation when we inherited. I understand the basics that I owe on the difference (the money made in that time lag).
However there are a few anomolies. Firstly this was the only property I owned then or ever at that point (I used the money to buy my first domestic home) - I was renting elsewhere once I inherited it. I couldnt have lived there even if I wanted as my sister and I were estranged.
Lastly it had been whilst my mother was alive for several years my principle residence and I have bills / council tax to prove that. Does this not mean that I am exempt from the large portion?
I would love some clarity on this otherwise I am facing a not insignificant pay out.
Many thanks,
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

You say the property was your principal residence when your mother was alive but
- did you have any ownership in the property whilst you were living there or
- were you making contributions towards the bills etc

many thanks
Customer: replied 2 years ago.

Hello

Yes I was making contributions towards the bills - in fact some may have been in my name, some in my sisters and some still in our mothers but we paid money into her account. She had alzhimers

We both moved in to care for her and then finally she had to go into a home. For a while we both lived there - covering bills between us, then I moved into rented accomodation before she died.

Hope this helps. I did not have ownership of it whilst she was alive however.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

Making payments for bills etc does not give you ownership, I'm afraid. You may have been living in the property but it would not entitle you to private residence relief against your capital gain as the property was not in your name whilst you were living in it. It was in your mother's name. Had you made it your principal residence once the property was inherited, then you could claim private residence relief for the period you lived in it and also additional relief.

More information on private residence relief can be found here
http://www.hmrc.gov.uk/helpsheets/hs283.pdf

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

thank you. this is helpful

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply.

I am pleased you found my responses helpful.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

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