Capital Gains Tax on Inherited Property

Sonia Callaway

I have a potential new client who is asking for advice on a property he has inherited.

The property was under the value for Inheritance Tax but he needs to make a decission on what to do with it as it has not sold.

The property needs a new roof etc, he was going to take it off the market, complete the restoration work, (new roof etc), rent it out for say five years to recover some costs and then put it back on the market.

I beleive that he will come into Capital Gains Tax on the difference of the value declared on the IHT form and the proceeds at the time of sale. It is not his main residence.

Also tax on rental income less expenses.

I have been on the HMRC site but would like to obtain as much information as possible on this subject, concerned that I may have missed something.

Any advice would be a great help.

Nilesh Mandvia

Sonia Callaway wrote: »

I beleive that he will come into Capital Gains Tax on the difference of the value declared on the IHT form and the proceeds at the time of sale. It is not his main residence.

Slight correction.

Sales value less sales cost = Net proceeds

Net proceeds less (cost of property i.e. probate value add enhancement expenditure which are still exist on disposal date add any acquisition cost if any) = Chargeable gain

Chargeable gain less annual exemption = taxation gain.

Sonia Callaway wrote: »

Also tax on rental income less expenses.

Broadly correct, however read propery income manual on HMRC's website.

HTH