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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Capital gains/inheritance tax Four siblings inherited a

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Capital gains/inheritance tax
Four siblings inherited a property in 2012 and during 2013 transferred the title into their names stating an open market value of £150k (not an RICS backed valuation). One of the four has lived there continually since before 2012 and the others have carried out works to improve the property value and comfort for the primary part owner/resident. Time has come to sell up and down size the property for the part owner/resident. I wish to understand the implications of selling said property with reference to capital gains and or inheritance tax liability. Any advice/guidance is appreciate.

Can you tell me what the value of the property was when the individual who left it to you passed away and when in 2012 that was please. Can you give me details of the nature of the improvements and the cost please. How much is the property worth now? Is the property owned in equal shares?
Customer: replied 2 years ago.


Open market value of £150k, August 2012

Light cosmetic works i.e new bath rm, kitchen, decorating throughout etc £9,500 during 2014/2015

Open market value today of £175k

Tenants in common with equal shares


I can tell you straight away that none of you will have any Capital Gains Tax to pay if you don't each exceed your annual allowance for tax free gains of £11,100 (2015/16) .

If you sell the property for £175,000 and the probate value was £150,000 and you spent £9,500 improving it, you will each have a gain of £3,875. The gain of the sibling who will have lived in the property for the entirety of their part ownership will be tax free due to the main residence relief rules. The gains of the other three will be covered by their annual CGT exemptions assuming they have no other gains which use that exemption.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Thanks, ***** ***** tax would only be due on the value above the declared probate value?

That's correct.

You said that the property had been transferred into the siblings names so they each have a CGT exemption to use. Had the property been sold by the estate, it would have had just one CGT exemption so there would have been some CGT to pay at 28%.

Inheritance Tax is paid by the deceased estates before the distribution of assets to the beneficiaries.
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