Q: The life tenant of a property passed away, and now the beneficiaries want to sell the property they inherited. Will they face capital gains tax (CGT)? If yes, do the costs paid by the life tenant count toward the cost base?
A: The beneficiaries won't pay CGT when they inherit the property due to a specific tax rule. Since the original owner bought the property before CGT rules changed and it was their main residence, a special provision applies. When the beneficiaries sell, they use the property's market value at the original owner's death as the starting point for CGT calculations. However, any capital costs paid by the life tenant might also be included in the cost base, as long as they were acting on behalf of the estate.
If you have any questions, feel free to contact Tax Ideas Accountants & Advisers. You can also book an appointment through our live calendar.
