Capital gains on resale of inherited house

[nmh001]

"sister has moved out and the interest is still deductable (and other costs)as she is in between tenants at this time. "

re the above comment just to warn that interest is deductible if incurred in-between lettings, but its not deductible if its "post-letting" - ie, after the last letting. so if its sold without being re-let the interest incurred after his sister left is not tax deductible.

 

[ClubMan]

So €43K in inheritance tax + €130K spent on renovations = €173K.
If it sold for €555K then your CGT bill should be something like 20% of (€555K - €213K - €130K*) = €42K.

So you would have paid €85K in tax and spent €130 on renovations but received €555K so you are c. €340K to the good (ignoring any outstanding mortgage amount to be repaid etc.)? Hardly something to complain about?

* assuming all of the expenditure above is allowable against CGT which is not certain. Please bear in mind that my calculations are rough and ready and may be incorrect.

OP said the rent received only equalled the mortgage repayments and as she had the house less than 2 years in all likelyhood it was mostly interest payments rather than capital which are deductable from the the rent received. Plus I assume sister didn't stay there for 2 years. Mortgage was 20% plus renovations = 213K X 20% = 42600 plus 130000 about a mortgage of 170000. Still paying mortgage - sister has moved out and the interest is still deductable (and other costs)as she is in between tenants at this time.

Well done on the triplets. No wonder you're stressed. No need to be stressed about the house though. A good tax advisor will be well worth the money and should be able to bring down any CGT or rental income tax for you. Plus you are about to make a great profit - 164K in 2 years (less taxes) 550 - (213 +130 +43). In addition you have the original 213 clear of taxes. I'd be very happy if I was you.

Just to reiterate - my calculations may well be all over the place but the bottom line (as others have mentioned) is that even after inheritance tax, CGT, rental income tax and expenditure on renovating the property you should still be looking at a pretty healthy profit.

 

[dubdoc]

Thanks a lots guys for all your help,

I know it is a valuable property and it is a great profit, should'nt moan!! Anyhow have made an appointment to see a tax adviser so should get this sorted out. Thanks again for all the helpful advice.