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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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My question is about CGT. My mother died in 2007. Her will

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Hello. My question is about CGT. My mother died in 2007. Her will went through probate with no Inheritance tax to pay. She owned half of her bungalow, my brother owned the other half. The remaining hafl was divided between myself and my brother. The probate value of the half share was £125000. My share was worth half of that = £62,500. The bungalow has now sold and I will recieve around £100000. I am retired and pay tax at the basic rate but am close to the threshold. So what are my tax liabilites?
JA: When was the property or asset sold?
Customer: completion is next Monday
JA: Anything else you want the Accountant to know before I connect you?
Customer: No that's all.
taxadvisor.uk

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

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Thank you for your question.

Assuming you have not lived in the property as your main residence and it is a second home (investment property) for you, capital gains calculations as follows:

Gain on sale (100,000-62,500) 37,500

Chargeable gain after gains allowance (37,500-12,000) £25,500

You state ..I am retired and pay tax at the basic rate but am close to the threshold.

CGT at 28% (worst scenario) £7,140

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.

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Customer: replied 5 months ago.
OK thanks. It might be relevant that mum's will indicated that all her assets were to be bheld on "trust for sale" and did not specify specifically what should be done with the property. As I understand it my interest was in the money and not the property.
Customer: replied 5 months ago.
What's the best case scenario with regard to the tax rate?
Customer: replied 5 months ago.
When will CGT need to be paid?

Thank you for your reply.

If you were given 50% share in the property she owned then the gain would be subject to CGT rates relating to residential property.

You need to check with the paperwork on exactly what was your legacy.

If your overall income is below the threshold for higher rate tax then some of the gain may attract tax at 18% and rest at 28%.

If sale takes place in this tax year then you report the gain in your tax return for 2019-2020 and tax payable by 31 Jan 2021.

I hope this is helpful and answers your question.

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Customer: replied 5 months ago.
OK, thanks. One final question then. When you say check your legacy does the wording of the will make a difference this? The will did not refer to any assets at all. It simply says that her estate is to be held on trust and that my brothrer and I have equal shares in the trust.

Thank you for your reply.

In my view as the assets were held in property then CGT would be calculated using CGT applicable to residential property.

I hope this is helpful and answers your question.

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Customer: replied 5 months ago.
OK, thanks, ***** ***** no further questions about this. Your information was very helpful.

I thank you for accepting my answer.

Best wishes.

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