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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If the value of the house i inherit was 90k when i settled

Resolved Question:

if the value of the house i inherit was 90k when i settled with my family leaving me with house and i sold it for 130k how much would i pay in tax if i earn 26k a year
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you expalin what you mean by "when i settled with my family leaving me with house" please.
Customer: replied 2 years ago.

sorry for the confusion.me and my brother own the house we got when my mother died. my brother and i mortgaged house to pay off third party. if my brother dies before me and i sell property how much will i have to pay in tax is i sell the property.

Expert:  TonyTax replied 2 years ago.
Thanks for the clarification.

The house was worth £94,000 when you and two others inherited it. Is that correct? If so, how much did you pay to buy out the third party? Who will inherit your brother's share should he die before you?
Customer: replied 2 years ago.

90K WAS VALUE BOUGHT OUT THIRD PARTY 30K

Expert:  TonyTax replied 2 years ago.
Thanks.

I also asked who will inherit your brother's share of the property should he die before you.
Customer: replied 1 year ago.

just me

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.

Hi again.

My answer is based on the assumption that the property will never have been your main home by the time you sell it.

When you inherited the house, it was worth £90,000. Therefore, the base cost for your one-third share is £30,000 (£90,000 / 3). You then paid £30,000 to buy out a third party so that added £15,000 to your share of the base cost of £30,000 bringing it up to £45,000.

If you inherit your brother's half share, the cost to you will be the value of that half share when he dies. Assuming that you sell it shortly after your brother dies, let's assume for £130,000, it's safe to assume that his half share will be worth £65,000. That brings your cost up to £110,000 (£30,000 + £15,000 + £65,000).

You will make a gain of £20,000 (£130,000 - £110,000). Deduct the annual CGT exemption of £11,100 and you are left with a net taxable gain of £8,900 on which you will pay CGT at 18% which is £1,602.

I hope this helps but let me know if you have any further questions.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

tony tax i am confused by my billing i have e-mail telling me ive paid in to a account. so i would like to tip but i dont know where i stand ref the cost.so until i find out i am not tipping. i have 1 email about a 38 pound charge & a 48 pound charge. sorry

Customer: replied 1 year ago.

when i sell the house would i be taxed on my income from the house & my annual income conbined eg. 20,000 + 26,000 = 46,000 taking me into higher tax bracket

Expert:  TonyTax replied 1 year ago.
You will have to contact just answer about the billing as that is something I have no control over. All I do is answer tax questions.

Your income is £26,000. The net taxable gain is £8,900. That gives a total of £34,900. You are nowhere near being a higher rate taxpayer.
Customer: replied 1 year ago.

excellent

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