CGT on jointly owned property when one oner has died.

My parents in law jointly owned a property 50/50. They bought this property for £78,250 on 15/1/2003 and lived in it until 30/8/2016 when they moved in with us, since when it has been rented out. Father-in law died on 26/10/2021 at which point his 50% of the property passed to their three children as trustees (according to his will), with his wife (my mother in law) retaining her 50% share. Mother in law continues to live with us and receives all of the rental income from the original proprty. Mother in laws will currently states that her 50% of the house will pass in equal share to the children (one of which is my wife) who are also the executors and the trustees of Michael’s 50%. Mother in law is now considering whether to sell the house now, or to keep it and leave it for the trustees and executors to sell after her death. I am trying to understand what is the capital gains tax implications in each situation. Neither father in law's original estate or Mother lin laws will come anywhere near inheritance tax threshholds. I am struggling to work out whether to take the value for CGT for 50% of the value when FIL died, or 100% of the value when the house is eventually sold. And can the trustees and MIL both use CGT allowances, or does just one allowance apply?

Hi,

HMRC can only provide advice based on current guidance and not on future events. If you were to sell now, your mother in law takes the value at time of purchase, 50%, against the value at sale, 50%, to work out her gain. She can claim Private Residence Relief for the period she lived in it to reduce any potential Capital Gains Tax.

For the trustees, it is the value at the time of the fathers death against the value at date sold. No Private Residence Relief is due for the trustees. Again the figures are based on 50%. You can see guidance here:

Tax when you sell property

Thank you.

Thank you for the reply. Do the three trustees each take one third of the 50% gain and individually calculate their own CGT for the year with each of their individual CGT allowances?