Newspaper article The Evening Standard (London, England)

Help Us Sell Up and Save the Max in Tax

Newspaper article The Evening Standard (London, England)

Help Us Sell Up and Save the Max in Tax

Article excerpt

Byline: Fiona McNulty OUR LAWYER ANSWERS YOUR QUESTIONS

QMY BROTHER and I inherited our mother's house when she died two years ago. We are both executors of her will and she left her estate to us equally.

We have let out the house for the past two years but now want to sell it. We have had it valued -- it has gone up massively since Mum died and is now worth PS1.2 million.

Someone suggested we should transfer the house into our names for tax purposes before we sell. Me and my brother own a flat together where we both live. He is employed and I am self-employed. Would this transfer be worthwhile? What tax will we save? ATO SELL the house and/or transfer it to you and your brother as beneficiaries, a Grant of Probate must be issued in relation to the estate of your late mother.

If the property is sold by you as personal representatives -- executors -- of your mother's estate, you will have available to you one capital gains tax allowance, currently PS11,100, and the rate of tax on the gain will be a flat rate of 28 per cent.

Remember that you should also have been accounting for the rental income from the property to the estate -- albeit you are the beneficiaries -- and paying tax accordingly.

If the house is transferred to you as beneficiaries before you sell it, you will then inherit the base cost of the property (ie at the date of death). However, when you sell, you will have the benefit of a second capital gains tax allowance -- one for you and one for your brother. The rate of tax on the gain will depend on your annual income and will be taxed at either 18 per cent or 28 per cent.

Do seek detailed tax advice before taking any action in relation to the property.

QI OWN my home jointly with my husband, and we have been married for almost 20 years. I have two children from my previous marriage -- my first husband passed away suddenly -- but none from this marriage. When I die, I want my share in our home to pass to my children but I would like my husband to be able to live in the property for the rest of his life. …

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