X

Contact Kirk Rice

Kindly complete the form below to send an enquiry. Your message will be sent to one of our Accountants or Financial Planners who will respond to you within 24 hours.

X

Request Appointment

Please complete this form to request an initial appointment at our cost.

X

Kirk Rice Blog

Inherited Property- What Tax Do We Pay When We Sell?Written on February 8, 2018 by Kirk Rice LLP

Inherited Property-  What Tax Do We Pay When We Sell?
Taxing Times Questions

The Question:

I inherited a property about 10 years ago and sold it in late 2016. Because I inherited it I did not declare the money I received on my tax return. I am now concerned that this may have been incorrect; can you provide any guidance on selling an inherited property?

Kirk Rice LLP answers:

I am going to assume that this was a second property and not somewhere you lived following inheritance. Given the long period between when you inherited the property and when it was sold, almost certainly the value of the property went up; the increase in value is known as a capital gain. Capital gains are normally calculated as the difference between what you pay for a property and what they are sold for. In your situation the gain is calculated as the difference between the selling price and probate value and so it is going to be essential that you obtain the probate valuation.

The gain, less the annual capital exemption of £11,100 (2016/17), is then subject to tax and should have been reported on a tax return for 2016/17. In the event that HMRC discover the taxable gain without you telling them, then in addition to the tax becoming due they will also add interest and a penalty.

The benefits of ‘coming clean’ is that a more favourable level of penalty may be levied, and if your circumstances warrant it, then the tax may be repaid by instalments. If you do not voluntarily make a disclosure and HMRC later discover that tax is due then you can expect quite a severe penalty to be levied.

I would always recommend that you engage an accountant to assist with the tax implications of an inherited property sale.

This post was last updated on 8 February 2018

Any reader interested in discussing inherited property and the tax implications of sale please telephone Graham Jennings on 01344 875 000 in our Ascot office or Hadley Baldock on 0208 789 8588 in our Putney office or email info@kirkrice.co.uk

If you would like to receive Kirk Rice’s Taxing Times Questions regularly by email, simply email info@kirkrice.co.uk stating Taxing Times Questions in the subject heading and we will add you to our distribution list.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. Please note this information is correct on the date published and details may have changed since.

Comments