Reader Question: What tax will I pay upon the sale of property I inherited?
My husband and his brother were given half of their mother's house when their Father died, their mother has subsequently died and the house has been sold. The half given to them was given in 1994 and they have been told they must pay capital gains tax on the difference between the value in 1994 and the price obtained now is this correct or don't they have to pay if they have owned it for over 10 years?
Ignoring your mother's side of the house as you don't say where that has gone, essentially your brothers have had a part share in a property since 1994.
The value they are assumed to have acquired the property at is the value as at the date of your father's death. Consequently when they subsequently sold the property they are taxed on the their own respective gains, based on their share of the sale proceeds minus their assumed acquisition price.
Your '10 year' idea probably stems from the days of 'taper relief' on capital gains. Previously under Capital Gains Tax rules (CGT) your potential tax liability reduced the longer you held an asset - this was called 'taper relief'. However the tax regime was simplified in April 2008 and taper relief was abolished.
One thing to point out is that as your brothers are taxed independently which means that they can each use their annual capital gains tax allowance to reduce their respective tax bills.
I hope that helps
Money to the Masses
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