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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My parents signed over the family home to myself and my two

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My parents signed over the family home to myself and my two brothers in June 1989 ie in equal shares as tenants in common. My parents have recently died and one of my brothers now wishes to buy mine and my other brother's interest in the house.
Are you in a position to advise on the Capital Gains Tax liability given that this house is a 'second home'?
Many thanks.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

I will need to know the value of the property when it was gifted to you in 1989, the cost of any capital laimprovements made to it and what the market value is now before I can advise you on the CGT position. What are the annual incomes pre-tax of the tow brothers who are selling up?

Customer: replied 9 days ago.
I will get back to you with the information, but it will probably be tomorrow.Regards


Customer: replied 8 days ago.
The value of the property when it was gifted (1998 not 1989) was £60.000 and the current value is £110.000. There have been no capital improvements. Both myself and my brothers are now retired; two of us pay tax at the standard rate, the other at the higher rate.Please let me know if you require any additional information.

The two brothers who are selling will be treated as having received full market value as you are all connected for CGT purposes.

If you each receive £36,667, you will each make a gain of £16,667 (£110,000/3 - £60,000/3). The first £11,100 of the gain for each of you will be tax free. That will leave you each with a net taxable gain of £5,567 on which you will each pay CGT at 18% or 28% or a combination of the two rates depending on the level of your respective incomes. So, the CGT charge will be somewhere between £1,002.06 (18%) and £1,558.76 (28%). Take a look here to see how much of the gain will be tax each rate.

I'm assuming that your parents continued to live in the property and if that was the case, the gift of it to you was a gift with "reservation of benefit". That means it will have stayed in their estates for Inheritance Tax purposes unless they paid you a full markert rent.

I hope this helps but let em know if you have any further questions.

Customer: replied 8 days ago.
Many thanks.


Would you mind rating my answer before you leave the site please.

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