CGT on Inheritance property

pikeydiva Registered Posts: 16 New contributor 🐸

I inherit property X and 'improve its condition' to sell when the market 'picks-up' during this time I rent out the property.
Is it correct that CGT is payable only on the profit made on market price at death minus the proceeds (after deducting allowable expenses, taper relief, annual exemption)?
AND tax is payable on the rental income 'profits' after allowable expenses, wear and tear (if furnished), charged at normal 'income tax rate'??

I would very much appreciate any help you can give me if this is an incorrect assumption.

Thanks for your time



  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    Not worked on this for a while, but as far as I remember inheritance tax (not CGT) is based on the value of the property at the death, but expenses can be taken against that if the benefactors have spent money on the property themselves prior to the death (this may happen if the benefactors lived in the property for sometime prior to the death of the relative).
    You would obviously have to pay tax on any rental income.
    However, you are not forced to sell the property, just to pay the tax due.
  • bryan100
    bryan100 Registered Posts: 23 New contributor 🐸
    You are correct in your assumptions. CGT is based on the proceeds less cost (probate value), less any further allowable costs and allowances.
    The issue of IHT is a red herring for the beneficiary. Any subsequent sale of an inherited pty on which IHT has been paid may allow the IHT to be adjusted if the sale is within the specified time limits.
  • pikeydiva
    pikeydiva Registered Posts: 16 New contributor 🐸
    Many thanks for your advice, it has helped clear my thoughts on this

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