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

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    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

                  Latest Activity

                  Collapse

                  • Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

                    1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
                    06-12-2021, 13:51 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
                    I've put some figures in my reply to a post just now but answers below to your questions.

                    a] £80k Jan 2021 sale price.
                    b] As property purchased before...
                    08-12-2021, 00:55 AM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

                    Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
                    Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
                    08-12-2021, 00:41 AM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    JP Keates
                    I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

                    Here's the timeline:

                    March 1982 - 1992 3 Owners,...
                    07-12-2021, 18:01 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
                    07-12-2021, 17:28 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by jpkeates
                    Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
                    If it was simply to improve what was then your home, it fails the basic test.

                    Get yourself to...
                    07-12-2021, 16:22 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by AndrewDod
                    The probate resets a lot of the stuff, but my main response was unapproved
                    07-12-2021, 15:36 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by AndrewDod
                    You are really short on detail:

                    Date (year & month) bought in joint names ______ (what % was yours then)
                    Date it converted to your sole name ______ (presumable date of death of parent 2?)
                    Declared vale at probate _________
                    Capital expenses between date of probate 2...
                    07-12-2021, 15:33 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by reluctantlandlord1976
                    We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
                    07-12-2021, 14:53 PM
                  • Reply to Caught out by changes to Capital Gains Tax
                    by AndrewDod
                    Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
                    07-12-2021, 14:33 PM
                  Working...
                  X