Capital Gains Tax on inherited property held in trust

[dunkertruck]

Hi all

My Grandma died many years ago and so my Grandad then remarried some 10 years ago. He bought a third of the house for £80k from his new wife and this was sorted legally and through paperwork. He died in Oct 2022 and his estate is almost at the point of disbursal barring some finer details.

In his will he named 6 members of his family as beneficiaries to his third of that house. Although it was clear we would only get that inheritance once his new wife passed away.

She is still alive, although has severe dementia and lives in a care home, so her family are looking to sell the house, which is fine by us.

Her family have asked their solicitor to point out to us that CGT may be payable.

I'm unsure as to why this would be the case as we don't technically own anything of the house, we are trustees in a third of it.

Would we be liable to pay CGT if it were to be sold in the next couple of months.

Bit of an odd one but hopefully someone can help.

Thanks

[Pezza54]

If your grandad bought his one third share of the house for £80k and put it in trust years ago for the benefit of 6 beneficiaries when the property is sold following the death of his wife. Provided the relative that has Lasting Power of Attorney for his wife has decided the property should be sold then there is no reason why the sale can't go ahead.
When an asset is removed from the trust, trustees normally pay any CGT when the total taxable gain is above the trust's tax free allowance (called the annual exempt amount). The CGT here is one third of the sale price of the house less £80k less £3k annual exempt amount, less allowances such as estate agent and solicitor's fees, less improvements (not maintenance) x 18% (current CGT tax rate) You should each receive one sixth of the remaining amount. If any of the beneficiaries are non tax payers they may be able to reclaim tax paid on their share from HMRC

[Pezza54]

There is info and guidance on the gov.uk website about CGT and trusts

[dunkertruck]

Thanks for the reply, I wasn't aware it would be calculated after the 80k was taken from it. That's really good news as I don't think the value has risen much since he bought his share 10 years or so ago. I did look at other websites but I couldn't work out what was removed first before CGT was applied. Thanks again.