Is Capital Gains Tax due on my House after I Die?

Capital Gains Tax (CGT) was introduced by Labour Chancellor of the Exchequer James Callaghan in 1965 to plug a loophole. It means you are taxed on the profit you make from selling an asset that has increased in value.

CGT applies to things like land, shares, personal belongings and property. But it is not due on your main home, only second homes or buy-to-let houses or flats. The rate can vary from 10% to 28% depending on a number of complicated things. You are allowed an annual tax-free allowance of £11,700 although that figure reduces to £5,850 for trusts. And gains can be offset against losses.

Any gains or losses in the tax year prior to a death must be included on the income tax return. Allowable losses can be offset against gains made in the previous three years. However, losses prior to death cannot be offset against gains made during the administration of the estate.

If CGT is payable, personal representatives should check whether beneficiaries are non-taxpayers or charities. If they are, tax can be saved or reclaimed.

For expert help with the probate process, contact Heritage Will Writing on 02380 879243.