Renovating House before inheritance, CGT?

[kaiserbill]

Hi,
My eldery mother has kindly written her will as to leave me the family home. Whilst the house is big and in a good location with regards to schools etc, it needs a serious overhaul. I'm estimating current value in todays market at 250K(??) based on whats nearby and the fact that anyone buying would have to invest 100K to make a good family home.

I'll like to do some initial renovation works (eg windows, insullation, energy systems etc) so as my mum can get the benefit of these while she still lives there.

Do i need to be careful from a CGT prespective not to add too much value to the house? Or if I kept a record of what I put into rennovation would this be taken into account when the house was being valued for CGT?
thanks in advance.

 

[Padraigb]

On the assumption that the work you propose will add value to the house of about the amount you spend, it is a very reasonable concern. The thresholds for CAT (which is the one that apples to inheritances, not CGT) are being reduced.

As the house belongs to your mother, any value you add to it would also belong to her. My suggestion is that any money you spend on the house be regarded as an interest-free loan to her, and that that you both sign a memorandum recording that. When the property passes to you, the net value of your inheritance would be the value of the house less the amount outstanding on the loan(s) you made to her.

If you live in the house with her, or if you have siblings with expectations, matters might be more tricky, and it might be best to seek professional advice.