CGT check appreciated, thanks in advance!

[tatemono]

Would really appreciate some help checking figures. Figures below are halved because my sister and I inherit in equal shares.

• property valued at £187,500 at date of mother's death in Jan 2015
• recent sale value £217,500
• improvement costs £5,318
• costs of sale: £2,440.50
• no reliefs
• my profit from property this tax year will probably be around £13,000 (i.e. my income as I have no other taxable form of income)

I estimate that these figures should result in a bill of approx £1,350 in CGT. Is that correct?

I will use all my personal tax allowance this year but my wife won't. Her taxable income from property is likely to be only £1,000 for various reasons. Would it therefore be possible for us to transfer some of her personal allowance to me to wipe out this CGT bill or is it the wrong type of allowance?

[AndrewDod]

a) CGT has nothing to do with the personal allowance (there is a separate CGT allowance). If you have already sold it, it is too late to involve wife. Your other income is only of marginal relevance apart from whether it puts you into higher rate tax.

b) ballpark 218-187 = 31
31-5 = 26
26 - 2 = 24

24 minus 12K CGT allowance = 12

Tax 18% of 12 = £2600

Was the probate value the ACTUAL declared value at probate?

Was this property letted?

[Gordon999]

My Calculation is :

Sale proceeds = £217,500 - £2440.50 = £ 215,060

Cost = £ 187,500 + £5318 ( improvements ) = £192,818.

Total Gain after sale = £215,060 - £192,818 = £ 22, 242

= £11,121 ( shared between 2 persons) Capital gains allowance = £12,300 So No Tax. to pay.

[AndrewDod]

Yes that is correct - I missed the first line which said that you are only selling half the place. No need to invoke your wife.

[tatemono]

= £11,121 ( shared between 2 persons) Capital gains allowance = £12,300 So No Tax. to pay.

thanks for your comments everyone. Alas Gordon999, although you were aware of my first statement that the property was shared between two of us, the figures I gave were already halved. You then went on and halved the gain which effectively halved the figures once more! My gain is around the £22K figure you arrived at so it seems there will be some CGT to pay at the 18% rate.

Yes, the property was let at sale. Does that make a difference?

The property was actually sold by the estate and the monies divided by the solicitor between my sister and I. Is there any relevance to the fact that the property was never in our names?

I've asked the solicitor who has been handling our probate whether the estate can pick up our CGT because it was only because of negligent legal advice (from former probate solicitors) that we ended up with a 7-year delay to probate. Otherwise, we would have sold it in early 2015. However, we'd obviously not have inherited as much cash had we done that so perhaps I shouldn't look that gift horse in the mouth.

Had I been more savvy, I would have spent estate funds adding a further value to the property through improvements to wipe out our CGT, as was my right to do as executor. Goodness knows the property needed it in places!

[AndrewDod]

I'd imagine it would be payable as CGT by the individuals. Certainly that would apply to interest earned on savings during probate so don't think CGT would be different. It is definitely not payable by the estate (that would be grossly unfair to some beneficiaries who had not used various allowances). Anyway if you wanted that you would be paying both CGT from the estate and more inheritance tax at 40% based on a higher probate value ... since even this one property is above the threshold... can't have it both ways.

[Gordon999]

OK. Your capital gain =£22,242 less £12, 300 = £9942 x 18% = £ 1790 tax bill to pay.