Tax enquiry

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My mother inherited one third of a house in which there was a sitting tenant, she, and the other owners, have agreed to sell the property which willl gain her about £40K.
She draws a teachers pension which puts her in the normal tax region which shows her paying around £5K in capital gains tax from the sale.
£40K would allow her to pay off her mortgage and live out her days in peace, however the £5K CG would prevent this.
Is there a legal, moral, way to avoid this?

[Eric Mc]

How have you arrived at a Capital gains Tax liability of £5,000?

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Eric Mc said:

How have you arrived at a Capital gains Tax liability of £5,000?

She looked on a government website which calculated it for her.

[sumo69]

stitched said:

She looked on a government website which calculated it for her.

Not sure you can rely on that as being gospel - how do you know she used the correct values, claimed all appropriate costs etc??

If you want, I can check it if you PM me the details? And no, its not an April Fools joke!!

David

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sumo69 said:

Not sure you can rely on that as being gospel - how do you know she used the correct values, claimed all appropriate costs etc??

If you want, I can check it if you PM me the details? And no, its not an April Fools joke!!

David

What details would you need? She is living off her teachers pension and had poor financial advice in the last ten years leaving her with a debt she is worried about leaving to us which is upsetting her.
I can provide all details via pm but what specifically would you need to know?
Oh and thankyou for the response.

[anonymous-user]

I suspect what she's done is,
40,000 - 11,000 = 29,000
29,000 taxed at 18% = £5,220 tax payable
This is almost certainly WRONG!!!!!!

The main thing missing is that she is taxed on her GAIN, not taxed on her share of the selling price.
You need to work out the difference between the value of the house when inherited and its selling price today.
To over-simplify, if the house has doubled in value she would be taxed on half of her share of the selling price.

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rockin said:

I suspect what she's done is,
40,000 - 11,000 = 29,000
29,000 taxed at 18% = £5,220 tax payable
This is almost certainly WRONG!!!!!!

The main thing missing is that she is taxed on her GAIN, not taxed on her share of the selling price.
You need to work out the difference between the value of the house when inherited and its selling price today.
To over-simplify, if the house has doubled in value she would be taxed on half of her share of the selling price.

I hope you are right on this fella as with a sitting tenant the appreciation is far less than market value. I'll look into it a bit more today.
Thanks for the info.

[sumo69]

stitched said:

What details would you need? She is living off her teachers pension and had poor financial advice in the last ten years leaving her with a debt she is worried about leaving to us which is upsetting her.
I can provide all details via pm but what specifically would you need to know?
Oh and thankyou for the response.

If your not sorted now, get back to me via PM - offer stands.

David