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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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Are you live? Assistant: Have you talked to a tax

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Are you live ?
Assistant: Have you talked to a tax professional about this?
Customer: I need to know about inheritance tax
Assistant: Anything else you want the Accountant to know before I connect you?
Customer: About property
Customer: replied 9 days ago.
Hi
Customer: replied 9 days ago.
My Nan owns a property that we are selling at 360,000 . There are 4 grandkids . What is the easiest way for us to split the 360k ?

NaN also has a freehold property which again is being given to grandkids to re develop into 4 flats . Do you have any advise on thins

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Thank you for your question.

Please clarify

[Q] My Nan owns a property that we are selling at 360,000 -

- does Nan own the property outright

- does she live in the property

- what is the likely gain on sale

My Nan owns a property that we are selling at 360,000 . There are 4 grandkids . What is the easiest way for us to split the 360k ?

[Q] NaN also has a freehold property which again is being given to grandkids to re develop into 4 flats

- what is the value of the freehold property.

Many thanks

 

Customer: replied 9 days ago.
450k aprox
Customer: replied 9 days ago.
Sorry let me start again ..
Customer: replied 9 days ago.
Zero Morgtage on both properties .. nan doesn’t live in either .. likely of sale on the 360 is high
Customer: replied 9 days ago.
Freehold property is 450k
Customer: replied 9 days ago.
Between 400-450

Thank you for your reply.

Does Nan have any income e.g.

- pension

- interest from savings

- rental income

Many thanks

Customer: replied 9 days ago.
She currently receives income on the freehold property of 12k per year ..

She has state pension
And she has private pension

Thank you for your reply

If you were to sell the property for around £360k, what is the likely gain on sale?

Nan would have to pay capital gains tax on the gain before you grandkids havea share of the money.

I am happy to calculate CGT if you let me have the information.

The same applies to the property for redevelopment.

Many thanks

 

Customer: replied 9 days ago.
What information do you need ?
Customer: replied 9 days ago.
Can she not gift the money to us I take it ?

Thank you for your reply

Information needed - rented property

- likley capital gain on sale

- is it owned by Nan alone

- was the property ever used as her main residence before letting it. If so, for long was the property her main residnce aand for how long it has been let

- were there any capital improvements

She can gift the money but you need to work out capital gains tax first,

I will be happy to do some calculations for you as premium service if you like,

Many thanks

Customer: replied 9 days ago.
The house which is 360k my sister lives in with no rent . The house was bought for 105,000. Home is owned by nan alone as grandad passed 10 years ago . It was her house before that .

As for the other freehold property which is let for 12k a year that was bought many many years ago at £3,500!

Thank you for your reply.

You are not giving sufficient information.

Property 1

- being sold for £360k and bought for £105k.

- is she still living in the property or did she move out when grandad paased away 10 years ago

- what happens once it is sold

Many thanks

Customer: replied 9 days ago.
Sorry yes that’s correct she moved out when grandad passed .. and my sister has been living there since ( no rent ) one sold that money will go to us grandkids

Thank you for your reply.

Please advise date of purchase of property where your sister is now living for past 10 years.

Many thanks

Customer: replied 9 days ago.
Aprox 20 years ago . Don’t have exact date right now

Please come back with the correct dates and I will progress with my calculations.

Many thanks

Customer: replied 9 days ago.
23 October 2000

Thank you for your reply.

I will come back to your shortly with CGT calculation.

Many thanks

Thank you for patience.

Based on information given, there is approx £28,000 of capital gains tax due on sale of the property where you sister is living rent free.

Total gain (360,000-105,000) 255,000

Gain covered by private residence relief (129/231months) £142,403

Gain subject to capital gains tax (255,000-142,403) 112,597

Assuming Nan has other income that is covered by basic rate tax, the maximum CGT payable on this gain would be (112,597-12,000) 100,597 x 28% £28,167

Amount available after CGT (360,000-28,167) £331,833

Property 2

Let property giving a gain of (400,000-3,500) say it is £400,000 for simplicity.

Maximum capital gains tax payable on sale of this property is

(400,000 x 28%) £112,000

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

Customer: replied 9 days ago.
So CG need to be paid even if the property is gifted ?

Thank you for your reply.

CGT is payable on the gain. If you decide to give away the property as a gift and not sell it for consideration, a transfer has taken place and this initiates capital gains tax calculation.

I hope this is helpful and answers your question.

Customer: replied 9 days ago.
Ok thank you

Thank you for your reply.

I hope this is helpfuland answers your question.

If there are no more issues, I will appreciate if you would kindly rate my service by selecting the 5 stars at the top of the screen before you leave, to ensure I get credited for it by Just Answer today.

Customer: replied 8 days ago.
Quick question again - once house sold AND CGT paid ... if my Nan passes .. will we then get taxed again ?

Thank you for your reply.

Capital gains tax and inheritance tax are two different taxes.

If your Nan was to survive for 7 full years after the date of the gift, then the gift is excluded from her estate for IHT purposes. Otherwise the gift is subject to IHT tax subject to taper relief as explained here

https://www.gov.uk/inheritance-tax/gifts

As covered in earlier postings, it appears Nan has assets that might exceed the threshold for inheritance tax.

I hope this is helpful and answers your question.

 

Customer: replied 8 days ago.
Sort last question .. nan is actually registered as living at the property and votes from that address .. is CGT still due even tho it’s her joke of residence

Thank you for your reply.

If this property is registered as her main residence then she would qualify for private residence relief fully and no CGT payable.

I hope this is helpful and answers your question.

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