Hi, my mum has been in a care home for nearly 3 years. I was told that I need to sell her house before her third year anniversary to avoid Capital Gains Tax. What I do not understand is the CGT liability if I do not sell it before the third year? My mum and dad purchased the house 60 years ago in joint names, and it is still in joint names even though my dad passed away 2 years ago. My sister and I are the sole beneficiaries. Any advice is much appreciated.
Selling my mums house
- Thread starter ipearso1
- Start date
Assume house is not let out.
The gain is sale price less March 82 value (Estate agent can help with this).
The exempt sum is (months owned as residence plus 36 months over total months owned) times gain.
Mum has an annual CGT exemption of
Tax on gain depends on Mum's finances, probably 28%
Does mum have capacity?
If not does anybody have financial LPA?
EDIT
Corrected annual exemption - thanks @Hours Away
Last edited:
Hi nitram, thank you for your response.
Sorry, I do not understand the exempt sum? Can we do an example?
Hypothetically:
Mums house is currently valued at 140000 and in 1982 it was valued at 80000. then the gain is 60000.
She has lived permanently in the house since 1963, the exception being the last 30 months when she went into a care home. (What would be the exempt calculation?)
The house is/has not been let out.
No, my mum does not have capacity. My sister has LPA.
Thank you once again!
Sorry, I do not understand the exempt sum? Can we do an example?
Hypothetically:
Mums house is currently valued at 140000 and in 1982 it was valued at 80000. then the gain is 60000.
She has lived permanently in the house since 1963, the exception being the last 30 months when she went into a care home. (What would be the exempt calculation?)
The house is/has not been let out.
No, my mum does not have capacity. My sister has LPA.
Thank you once again!
The rule you are referring to is the 36 month relief which applies when someone leaves what was their main residence to go and live in residential care.
www.gov.uk
If you assume you're at the end of the 36 month period then there would be no chargeable gain as the whole 42 year period since 1982 would be exempt.
If you were to sell a year later ie after 43 years and assume the value is still 140000 then the chargeable gain who be the proportion of gain related to the last year only which would be 60000*(1/(42+1)) ~£1400 which would be covered by the current capital gains tax allowance of £3k (it was £12,300 but has been reduced over the last couple of years).
www.gov.uk
Tax when you sell your home
Relief from Capital Gains Tax (CGT) when you sell your home - Private Residence Relief, time away from your home, what to do if you have 2 homes, nominating a home, Letting Relief
If you assume you're at the end of the 36 month period then there would be no chargeable gain as the whole 42 year period since 1982 would be exempt.
If you were to sell a year later ie after 43 years and assume the value is still 140000 then the chargeable gain who be the proportion of gain related to the last year only which would be 60000*(1/(42+1)) ~£1400 which would be covered by the current capital gains tax allowance of £3k (it was £12,300 but has been reduced over the last couple of years).
Capital Gains Tax: what you pay it on, rates and allowances
What Capital Gains Tax (CGT) is, how to work it out, current CGT rates and how to pay.
