Am I liable for tax on the sale of Dad's house?

Question

My self ,my brother and sister have have just sold Mum and Dad's house which was left to us in their will. Will the proceeds be taxable? I am self employed and a standard rate taxpayer in the UK

Answer 1

If the house forms part of your Father's estate, Capital Gains Tax won't apply. That would only happen if the children had possession of the house out for some time after probate, and the deeds were in their names for the period after probate to the sale.

If the whole estate was over the Inheritance Tax limit (see HMRC website), the executor is liable to pay IT out of the sale proceeds.

If you are receiving your share as a beneficiary of your Father's will, you do not pay tax on your inheritance, but if you invest the money, you will be liable to tax on the interest.

Answer 2

depends on how much the house is worth as there is a threshold for paying inheritance tax

http://www.direct.gov.uk/en/MoneyTaxAndB...

Answer 3

A small proportion will be taxable. This is the capital gain between you receiving the house in the will and the value it was sold for.

As you will have incurred costs such as estate agents and solicitors you can set these against the gain. Assuming you have only held onto the house for a short period particularly in the current weakening housing market I would doubt you actually have made a taxable gain and thus have no tax to pay. Each of the owners would have a £9,600 annual exemption to set against the taxable gains. Any excess would be taxable at 18% but on the basis of my assumptions I'd imagine any tax is unlikely.

I assume you have dealt with the relevant inheritance tax or were below the threshold for this.