How does capital gains tax affect the sale of an inherited property?

capital gains tax

Capital gains tax is a tax you pay when you sell something that has increased in value since you acquired it.

Everyone has an annual tax-free allowance (also referred to as your Annual Exempt Amount) of £11,000, so you’ll only pay capital gains tax on any profit or ‘gains’ you make over that amount.

Capital gains tax does not apply when selling a property ordinarily, but may well be applicable when selling an inherited property, if the property increases in value between the point of inheritance and when you sell it.

If you decide to sell a property that you’ve inherited, you will only be charged capital gains tax on the increase in value – the ‘gains’ – rather than the full amount you sell the property for, so a quick sale after inheritance often means you avoid having to pay any capital gains tax at all. If you do not own any other property, another route is to live in the property from the time of inheritance until the point of sale, as this would make the property your main residence and should ensure that it is exempt from capital gains tax under ‘private residence relief’.

The only other tax associated with inheriting a property, is inheritance tax, but this should be covered by the deceased’s estate. The only time you’d need to pay inheritance tax when inheriting a property would be (a) if the will stipulates that you’re responsible for paying the inheritance tax personally, or (b) if the deceased’s estate is unable to cover the cost of the inheritance tax.

Inheriting a property can bring with it a wide range of emotions. There are several options – you can keep the property and live in it yourself, rent the property out or sell it. If the property isn’t suitable for you to move into yourself, and you don’t want the hassle of renting it out, a quick, stress-free house sale to Quick Move Now can be a hugely attractive option. With no viewings to arrange and no negotiations to manage, Quick Move Now could have the money from the sale of the property in your bank account in as little as 7 days, leaving you free to concentrate on the things that really matter.

For Capital Gains Tax advice specific to your individual circumstances, you should consult a solicitor or contact Citizen’s Advice.

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This content was written by Quick Move Now
Published on 25th January 2016
Last updated on 22nd May 2019

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