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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14354
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My husband and I inherited his Mother's house in 2003 at a

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My husband and I inherited his Mother's house in 2003 at a time when the estate agents tell me the selling price would have been around £200, 000. It was a lovely, detached 2-bed bungalow in good condition. When I sold it, in 2017, it went for 285,000 and had lost some value after 14 years of being rented.During the time it was rented I replaced the windows, replaced fencing and felled trees. Otherwise, it was only fairly well maintained by an agent.
After my husband's death, the property became mine and the land registry changed the ownership to me only.
I am very confused now about how to calculate all this. I rang the tax office and I think this is what I am liable for, but I was very confusedIn 2016, I apparently owned £142,500 of the value of the property and will now need to pay capital Gains gains tax on thisI also owned half of the £200,000 the house was worth in 2003:- £100, 000I will, therefore, need to pay tax on £42,000-minus £11,000 and costsCould you read through all this for me and see if it makes any sense. I have all the paperwork for this year's tax ready to and would love to get everything settled before the end of May so that I can finally move on.
I will very grateful for all your help

Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Hi

Thanks for your patience

Then you have an initial gain of £85000 (difference between the sale and inherited price) but note that you mist use the estate/probate for the value of the property not an estate agents post valuation - so do check that figure

Did you ever live in the property if so what dates ? And did you declare all the rental income to HMRC?

What date did your husband pass away?

What is your usual annual income ?

How much did it cost to replace the windows and was this ALL of the windows or just some. Note that fencing and felling of trees have no bearing on the capital gain

I can then calculate the gain for you

Thanks

Sam

Customer: replied 3 months ago.
Hi Sam, We never lived in the property at all. We rented it through an agency and paid tax on the rental income, dividing this between us as we had shared ownership. I will have to get back to our solicitors tomorrow to find out the probate valuation of the bungalow, and how the property was vested in our joint names.
I replaced most of the windows at a cost of about £5000.
My income is my teacher's pension of £22,000 plus my state pension. Since my husband passed away I get a share of his pension which is around £19,000. I pay tax on all this.
Thank you for your patience. I will get probate value to you tomorrow, However, if you able to give me some indication of
how to proceed in th meantime, an what proportion of ther monies I need to think about budgeting for, I would be very grateful
Thank you

Hi

If you did not replace all the windows then you cannot offset this against the capital gain either I m afraid and if you want a preliminary idea of the gain then please provide the date you husband passed away please

Thanks

Sam

Customer: replied 3 months ago.
Actually, I have just checked again. My teacher's pension is £26,625 and my husband's pension is £19,900-all before tax. Sorry!

I need the date that your husband passed away please

And then as your income is so high - how much your state pension is a year

Thanks

Sam

Customer: replied 3 months ago.
My husband died on September 4th 2016. My state pension has changed recently, but in March it was £176.56 weekly

Hi

Thanks for your responses

Then of the £85000 gain (from which you can deduct the costs to sell such as estate agent and legal fees) the time that you owned 50% and then 100% are apportioned as follows

You owned for 168 months (approx) and it was 50% owned by you for 156 months so to establish your share

£85000 x 156/169 = £78929 x 50% = £39465 and then

£850000 x 12/168 = £6071

So your share of the gain = £45536

Then for 2017/2018 the first £11,300 is exempt leaving £34236 and because you are a high rate taxpayer then all of this gain will be liable to 28% = £9586.08 capital gains to pay

If course when the costs to sell are deducted and the time owned and the 50%/100% share time fine tuned, then the gain will be a bit less.

Thanks

Sam

Customer: replied 3 months ago.
Thats great thank you!

HI

You are very welcome and if you need the calculation fine tuning or get the actual probate value Im happy to provide a new calculation

But if you have all that you need for now, it would be appreciated, if you could rate me for the level of service I have provided

Thanks

Sam

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