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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My husband inherited his father's bungalow (FiL died December

Customer Question

My husband inherited his father's bungalow (FiL died December 2013). Probate came through August 2014. Title registration with Land Registry since October ('due with you any day now'). Since Feb 2014 we have had tenants in the house. The house is going on the market at present. The probate valuation was, we have discovered, very low (too low, but we did not know that). His estate did not qualify for inheritance tax, even with the probate valuation. Nor would it qualify with the current market estimate, which is £150k more than the probate valuation. Two questions. 1. Does the fact that we have had a tenant in the house mean that we qualify for the 18 months deadline for sale without Capital Gains Tax being charged rule? 2. Does the fact that we lived in the bungalow (with my parents in law) for some time (though our family still lived in our old family house) mean that we might qualify for some Capital Gains tax relief? Everywhere I look I seem to get a different answer to these questions.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

1 The last 18 months of ownership relief only applies where the owner of the property lived in it at some point during their ownership of it.

2 You will only qualify for main residence relief if you lived in the property during your ownership of it I'm afraid.

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

You might look into the possibility of having the probate valuation of the property changed if you consider it was mis-valued. I'm not a lawyer so you would need to discuss this with a suitable qualified solicitor.

I hope this clarifies your situation for you but let me know if you have any further questions.
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Customer: replied 2 years ago.

Thank you for this. We feel let down by our solicitor but are not the sort who challenge things. We will look at HS283. We have been totally up front with the tax man so that's OK. Do you know if it might be worth my husband gifting half the house to me once the Land Registry respond? Do you know if that is a complicated procedure. Would the tax man accuse us of trying to avoid capital gains tax if we do that?

Expert:  TonyTax replied 2 years ago.
There is nothing to stop your husband putting the house into joint names before it is sold so that when it is, you each get an £11,000 CGT exemption. HMRC has publicly stated that they will not challenge such an arrangement which is commonplace. However, you need to be aware that there are two rates of CGT, 18% and 28% and the rate or combination of rates that you pay will be dependent on the sum of your respective incomes and capital gains in the tax year of disposal.

There is some information on the property transfer procedure here.
Customer: replied 2 years ago.

Thank you. We will look into this.

Expert:  TonyTax replied 2 years ago.
Thanks and good luck.

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