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bigduckontax, Accountant
Category: Tax
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10 Years ago my father put his house where he lived in Scotland

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10 Years ago my father put his house where he lived in Scotland in Joint names. It was valued at £100k. He has recently died and therefore the house in now in my sole name. The house has just been sold for £88k with £3k costs involved. I am struggling to work out what Capital Gains Tax I should pay for tax year 2016_6. My personal circumstance are that I work full-time earing £32k and get dividends from my husbands company of around £15k a year.
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. Before I can address the situation fully I need to know if you ever occupied the house as your sole or main domestic residence and if so for what periods?
Customer: replied 1 year ago.
No, I never did.....................
Expert:  bigduckontax replied 1 year ago.
This is a tad complicated. When he put the house in Joint Names that was, as far as he was concerned a part disposal, but as it was presumably his sole or main domestic residence he would be entitled to Private Residence Relief (PRR) which is at 100% of any gain. On his decease there is no gain involved as all his assets are aggregated and exposed to Inheritance Tax (IHT) at 40% on any surplus over 325K. The 325 is inflated by any inter spousal or charitable bequests. On the assumption that your half was still worth 50K, you should check the position with the executor's account from the probate, you have 50K for 120 months and anther 50K to determine an acquisition price, say 100K. The sale netted 85K so there is a capital loss involved, no gain and thus no tax to pay. The capital loss can be carried forward indefinitely to offset future taxable capital gains. I do hope that you have found my reply of assistance.
Customer: replied 1 year ago.
Not sure I completely understand it. From what you say I think the impact is as follows:
Original House in my father and step mums name. She dies 12 years ago and the house is now in my fathers sole name. 2 years later he puts the house in joint names with myself at which point the lawyer handling the change in the deeds values the house at £100k. My father dies early Jan and I am the sole executer. I am working with my fathers Lawyer who is handling his estate and also the sale of the house. House has been sold this week for £85k with £3k costs thus the nett value is £85k. There is no probate involved (in Scotland it is called something different but lawyer says it is not required as virtually the bank accounts/bonds were in joint names as well.) So don't understand what/why I have to check in probate?????????
Expert:  bigduckontax replied 1 year ago.
From you original question you acquired the house in two portions, one by gift and the other by inheritance. To ascertain the exact acquisition value for Capital Gains Tax (CGT) purposes the part acquired by inheritance would be needed and that would be available from the probate filing. We do have probate in Scotland, I know I live there, but it is called confirmation. From what I can see this acquisition value exceeds the sale receipts leaving no gain exposed to CGT.
Customer: replied 1 year ago.
OK, so if I understand you then I have no exposure to CGT regarding the sale of the house and therefore I do not have to contact the Inland Revenue regarding it as any figure involved would not a loss and not a gain.................. Is this correct???
Expert:  bigduckontax replied 1 year ago.
The Inland Revenue ceased to exist some years ago on amalgamation with HM Customs and Excise to form HMRC. You would have to declare the loss on your Annual Self Assessment Tax Return to have it recorded so that it can be carried forward. Otherwise you appear to have grasped the position.
Customer: replied 1 year ago.
I don't complete an annual tax return therefore presumably the loss just gets lost so to speak...... Are you saying that I should contact HMRC and request an annual tax return for 2015_6 be sent to me?????
Expert:  bigduckontax replied 1 year ago.
Yes you should it you do not want to loose this loss. A letter to your tax office might well suffice, but I would be inclined to assess for this one year for this reason. I accept that many tax payers never have to self assess, indeed I have been told to stop myself!
Customer: replied 1 year ago.
Ok, Thanks for all you help in making me understand it better................
Expert:  bigduckontax replied 1 year ago.
Delighted to have been of assistance. Please be so kind as to rate me before you leave the just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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