I inherited half my mum's house: will I owe tax on the 24 years her partner was allowed to live there?—This is Money
Private client partner Kieran Bowe has responded to a reader in This is Money who inherited a 50% share of their late mother’s property in 2000, but her partner had the right to remain there until his death in 2023 through a Life Interest Trust. The reader had no access or control over the property and was added to the deeds in 2005 with a restriction on selling their share. They are now asking whether they owe Capital Gains Tax (CGT) on the property’s value increase and from which date their ownership would be considered for tax purposes: 2000, 2005 or in 2024 when probate was granted.
Kieran confirms that their mother’s half-share of the property was treated as owned by her partner for Inheritance Tax (IHT) purposes, meaning its value was included in his estate for IHT calculations upon his death in 2023. He states that this allowed both halves of the property to receive a Capital Gains Tax (CGT) uplift to market value at that time. Consequently, CGT would only apply to any increase in value after 2023.
The tax position in relation to your late mother's one-half share of the property is that your mother's partner is treated as owning your mother's share of the property in his lifetime for inheritance tax (IHT) meaning that the value of the one-half share of the property is brought into account for IHT in his estate. This means that both your mother's share of the property and her partner's share benefit from an uplift for CGT to his date of death. If CGT is payable then it would only be on any gain from the value of the property as reported for IHT at date of death in 2023 and not from when your mother died in 2000 or when legal title of the property was transferred to you in 2005.
The full article is available online from This is Money.
Kieran Bowe is a partner in the private client team. He specialises in the preparation of wills, probate and estate, tax and succession planning and advises on wealth protection, business succession and trusts. He has significant experience in managing complex estates and cross-border matters.
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