Inheritance and Capital Gains Tax

February 26th 2020

We were instructed by a long standing friend/client/accountant, who was terminally ill with cancer.  The client and his wife held an investment property in Oxfordshire which they had acquired many years ago.  The property was heavily pregnant with capital gains  We advised our client that on this death, the gains on his share of the property would be written off for tax purposes.  It was understood that, on the death of his client, the widow would want to sell the house.  Capital gains would be an issue on her share. 

Our advice to the client was that his widow should transfer to him her share of the property.  As between husband and wife there was no gains, and so the client would take his wife’s share of the investment property at her base cost.  There was no question of inheritance tax because of surviving spouse exemption.

On the death of the client, the investment property passed to the widow free of capital gains tax and inheritance tax, and was subsequently sold.