Around twenty years ago my parents amended the ownership of the family home so it was jointly owned one quarter each by my parents, my sister and I. At the same time they made wills stating that their estate should be evenly split three ways between their surviving spouse, my sister and I. Their home is their only real asset, is owned outright, and is now worth around £1m.

Both my parents continue to live in the same house, so I understand they retain benefit, but I don’t know (because of joint ownership of the home) how the reservation of benefit and nil rate allowance would apply when one, then the second, parent dies. Would the second parent’s estate be the entire value of the property as they would carry on benefitting by living there? Even though they will only own 1/3 of the property at that time?

My sister and I both have our own homes now, so does this mean that we will have to pay capital gains tax when the home is sold, for example to pay IHT on the death of the second parent? How can the whole property be seen as belonging to my parents for one tax, but part owned by my sister and I for another?

I have also heard that the local authority can still ‘take’ the shares of the house that my sister and I own to pay for any care home fees owed by my parents – is this correct?

How can we simplify matters and reduce the overall tax bill / care fees due to the family?

  • It's possible this question might get a better response on Law.SE (I'm not suggesting closing it because I don't think it's off-topic here either....)
    – Vicky
    Commented Sep 9, 2019 at 11:47

1 Answer 1


Firstly, bear in mind, if CGT was due at all, you would only pay CGT on the gain you made on your share of the property, and only when you sell the property. If that gain is less than £12,000 you would be under the limit and would not have to pay any CGT.

Secondly, if IHT is due at all, only the part of the house that was owned by the spouse that died would form part of their estate, and only if their estate was worth more £325,000.

Supposing the house is worth £1m now as you state, the current ownership is:
- Parent 1: £250k
- Parent 2: £250k
- You: £250k
- Sister: £250k

When Parent 1 dies, each of the rest of you inherit an additional £83,333.

Unless there are substantial other assets that you haven't mentioned, Parent 1's estate will not trigger IHT.

IHT will trigger when Parent 2 dies because at that point (assuming they still have the house and haven't sold it and used the money to pay for care home fees, and the value of the house is still the same) their estate will be £333,333.

If you collectively sold the house before both of them had died (either while both of them were still alive or one of them had died) then I think you would pay CGT on the gain you had made from the time you acquired your share of the house to the time you sold it. The parent(s) would not pay CGT on their share(s) because it continued to be their primary residence until then.

Please note, I am not a lawyer nor a financial adviser and this is just my "common sense" interpretation of the rules. I strongly recommend consulting an actual lawyer or IFA to understand the complexities of this case.

There is also an interesting note on this page saying (my emphasis):

Do I have to pay capital gains tax on inherited or gifted property?

If you give a property to your spouse or civil partner, or to a charity, there won’t be any CGT to pay.

If you inherit a property (and any inheritance tax due has been paid by the estate) then there won’t be any further tax to pay until you sell the property. The gain will be measured from the date at which you acquired the property.

If you sell a property that was occupied by a dependent relative, then you may not have to pay CGT. Ask your adviser about this.


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