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bigduckontax
bigduckontax, Accountant
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I am trying to resolve tax responsibilities 2015/16

Customer Question

I am trying to resolve tax responsibilities for FY 2015/16 for both my wife and myself, particularly regarding the sale of a house which was not our own place of residence.
• Parents’ House – gift to me (only son) @ June 1993 – value unknown
• Remained residence of parents only - Father d. 2004
• 50% ownership transferred to my wife Aug 2013
• Mother died Aug 2014 having remained as sole resident of house
• Sold 18 Sep 2015 @ £80,427 (net of solicitor’s fees, etc)
Question – what are CGT/Inheritance tax implications for each of us please? Any guidance most gratefully received.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. We have a bit of a problem here. You say the house was gifted to you in June 1993. You then go on to say that your father's will bequeathed 50% of the ownership of the house, which he did not own although he may have occupied it, to his wife! As far as your late parents are concerned there are no Inheritance Tax problems beyond a 40% charge on any assets over 325K. This may be inflated by charitable, inter spousal bequests and your mother might have inherited unused portion of the husband's 325K also. You will be liable or Capital Gains Tax (CGT) on the gain made between the current market value as at the date of gift and the net selling price of say 80.5K. You will have to seek the advice of the Valuation Office Agency (VOA) to determine the 1993 value. The VOA is part of HMRC staffed by Chartered Surveyors whose main task is to assess bandings for Council Tax and valuations for Business Rates. However, the Agency is notified of every sale and the price involved so thus have a good database of local historic values. This gain will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal. You have an Annual Exempt Amount (AEA) of 11.1K to offset this gain. As your wife did not own the house she incurs no CGT liability on sale. I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.
thanks Keith. Sorry not to have been clearer - the 50% transfer was from me (owner since 1993) to my wife (nothing to do with my father's will). How does that change the picture please?
Expert:  bigduckontax replied 1 year ago.
In basic terms she shares the CGT liability and she also has an AEA of 11.1K which will reduce liabilities somewhat, but not much. Your wife's CGT liability is on the gain from 2013 to 2015 values whilst yours remains as I originally quoted, but with a modest adjustment for the last two years when you split the ownership with your wife. It would have been far better had this split been done immediately on acquisition and you should have been so professionally advised at the time. Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.
thank you very much
p.s. we hadn't met at the time of transfer(!)
Expert:  bigduckontax replied 1 year ago.
Can't be helped unfortunately; thank your for your support

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