Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
I assume that your London house is your sole or main domestic residence and that you intend to sell the Maidstone dwelling. Please confirm and advise if you ever lived in that house.
Thank you, ***** ***** the probate value of granny's house, the 175K quoted?
Ja is playing up tonight! Do you own granny's house jointly with your wife?
Oh, I am so sorry.
Your Capital Gains Tax (CGT) liability is 300K - 175K = 125K less your non cumulative Annual Exempt Amount (AEA) of 11.1K leaving 113.9K exposed to tax, but only half as your late husband's share of the 300K value will be included in his estate for Inheritance Tax (IHT) purposes, there being no CGT on death.. Your element 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 sale. A worst case scenario is a tax bill of some 13K.
The gift to your children will create a Potentially Exempt Transfer (PET) in your IHT affairs. PETs run off at a taper over seven years and in the event of your demise are added back to your estate for IHT purposes. PETs are the first to suffer IHT and if the estate is insufficient to meet the tax on the PET the liability cascades down to the beneficiary for immediate payment. IHT kicks in at 325K, but from 2017 to 2020 this rises progressively to 500K for family homes left to children. There is also a possibility that you have inherited some or all of your late husband's 325K also.
I do hope that you have found my reply of some assistance.
Delighted to have been of assistance.
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