When I die (but not too soon, I hope).

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    When I die (but not too soon, I hope).

    I have owned and let a property since 1990. This year, for the first time, I took up occupation. I paid £80,000 and it is now worth about £280,000 so I am looking at a big capital gain tax bill. Although my wife and I are still very much married (we see each other every day, holiday together etc. we live apart. I understand that if I die first (very likely) I can leave the house to my wife with no CGT liability at that time. If this is true what would be the acquisition value for her, the original purchase price or the value at the time she inherits.
    If it would be of benefit I would happily change ownership to joint tenants with my wife now.
    All advice gratefully received as this is, to use a non legal term, doing my head in.

    #2
    For IHT purposes, inter spousal transfers are exempt even during separation.

    Her acquisition cost would its value when she inherits it.

    Comment


      #3
      King_Maker,

      Just trying to get this clear in my head. Does this mean, if husband passes away - wife inherits property. Say it's worth 300k when she inherits. Does this mean she is not liable for inheritance tax, but if she sells later on, say with a value of £350k, she would pay capital gains tax on the difference - i.e. CGT on £50k?

      Many thanks.

      Comment


        #4
        Yes.

        If the widow were to make the inherited property her residence/main residence, then some/all of the CGT would be extinguished.

        Comment


          #5
          Originally posted by King_Maker View Post
          For IHT purposes, inter spousal transfers are exempt even during separation.

          Her acquisition cost would its value when she inherits it.
          Thanks for that KingMaker. Just so that I am clear on this, Assume we remain separated and I die leaving the house worth £280,000 to my wife. There is no IHT liability or CGT liability at that time? and if she sold the house the next day for £280,000 there would be no CGT due?

          Comment


            #6
            As there is no CGT on death, only IHT is in point.

            There is no IHT for inter-spousal transfers.

            Comment


              #7
              Originally posted by King_Maker View Post
              For IHT purposes, inter spousal transfers are exempt even during separation.

              Her acquisition cost would its value when she inherits it.
              http://www.hmrc.gov.uk/cgt/intro/gif...-divorce.htm#1

              This states that when a husband transfers an asset to a wife, her base cost for future disposals is the price HE paid for it, not its value when he transferred it to her...

              Otherwise you'd continually transfer assets inter-spouse and constantly cancel the accrued gains.

              Comment


                #8
                Originally posted by badbobby View Post
                http://www.hmrc.gov.uk/cgt/intro/gif...-divorce.htm#1

                This states that when a husband transfers an asset to a wife, her base cost for future disposals is the price HE paid for it, not its value when he transferred it to her...

                Otherwise you'd continually transfer assets inter-spouse and constantly cancel the accrued gains.
                You are referring to CGT - not IHT.

                Comment


                  #9
                  Originally posted by King_Maker View Post
                  You are referring to CGT - not IHT.
                  Quite right - my mistake.

                  Comment

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