Tax and CGT

[supadeja]

OK my sister emailed me this - I was hoping you could answer her worries to put her mind at rest...

Our Mother wants to leave her whole house to her in her will (We are ok with this - the other siblings)
She is underneath the IHT bracket her house worth 175thou

She is worried about Capital gains tax or whatever and how that would affect her

She is currently in rented accomodation - If her housing assn gave the right to buy (they are thinking of it) and she sold mums house to buy the home she is currenlty in how would that affect her tax wise etc (She is on benefits) what tax would she be liable for

If she moved into my mothers house then decided she wanted to sell it and move elsewhere would tax affect her then? Or does she hafta live there for a certain amount of years to be free of this worry?

She has Multiple Sclerosis and is unwell as it is and this worry is making her very ill, she is worried she will end up being made homeless by tax and stuff and cannot see past the worries to this lovely gift left to her by our mother

I am sure if you could answer these worries for her she would be able to breathe a sigh of relief and leave the rest of us in peace

many Thanks I truly pray you are able to help and calm her down

[jno]

I don't know, but have you tried posting this in the Law section? You'll probably get more expert advice there. Good luck.

[kwicky]

You probably need professional help but to get a flavour of the pitfalls look at this publication:

http://www.taxcafe.co.uk/property-tax-guide.ht ml

[Catso]

As regards the inheritance, as you say (currently) it's under the inheritance threshold, so no tax.

CGT doesn't apply to the actual inheritance 'transaction'.

If she then immediately sold the house, without ever living in it, CGT would apply to any increase in value between the value declared for probate (IE the will) and the price she gets for it. EG if the house sold for �10k more than it was valued when she inherited it, CGT would apply to the �10k.

But if she moved into the inherited property, CGT would then not apply at all. I don't know if there is a qualifying period - I don't believe so. It just has to be the 'main' residence.

So, in essence, no, she won't end up homeless. At worst probably a few �1000 down.

[Catso]

BTW, I should add I'm not a professional. For definitive advice, you/she should go and see a financial advisor. Or maybe the CAB, who are free.

[supadeja]

CAB are gonna ring me back about this - Many thanks everybody

[gina32]

inheritence tax isnt just on a property it is also on anything of value that is left behind, i.e house worth 200k and furniture, money etc worth 70k tax would have to be paid on it