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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My father-in-law died in January, leaving everything to his

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My father-in-law died in January, leaving everything to his wife. 4 properties, one of which has been sold to pay debts. She is selling the family home now, which is expected to yield £750,000. This will be used to pay off the mortgage on the 3rd property,
and a substantial amount on the 4th. So, after the family house is sold, there are 2 flats: Flat 1) Mortgage free, which she's living in. Flat 2) Has a £300k mortgage on it. She is going to gift both properties to my wife and I. We are aware of the gift with
reservation aspect of the property she is living in, but this is OK. My question relates to Flat 2) - my wife and I will be living in this property, and intend to do so for some time. If we do some work on it, and in a few years sell for more than the current
valuation, will we have to pay CGT on the gain if this is our main home? I also believe, as we are taking over a property which a mortgage on it (£300k), we have to pay SDLT when the property is gifted, please could you confirm? Thanks very much again.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for requesting I help you with your question CGT on sale of Flat 2If you make Flat 2 your main residence and it remained your main residence for the whole period of ownership, then your gain on sale of it would be covered in full by private residence relief.More information on this can be found herehttps://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief SDLT on a property with motgageYou are corerct in your understanding that SDLT would be payable on the mortgage amount taken over.More information on this can be found herehttps://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property#receiving-land-or-property-as-a-gift-or-from-a-willI hope this is helpful and answers your question.
Customer: replied 1 year ago.
Thanks for another excellent reply.The property (Flat 2) consists of a large flat above a commercial unit (a shop). From my understanding of the GOV.UK document, the primary residence relief would only apply to any gains made on the residential proportion of the property.As the entire gain will be due to renovating the residential proportion of the property (the shop won't increase in value), would it be wise to have a professional valuation of both parts of the property before we begin the work? As proof?Thanks again
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.I agree with you... you want to avoid any issues in years to come.. it would be adviseable to have professional valuation of both parts and use that as a basis for calculating the chargeable gain.I hope this is helpful.
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Customer: replied 1 year ago.
Many thanks. I've worries about this for months.
Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer.
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Best wishes and relax...

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