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24 January 2022
Loan repayment
In July 1995 Mr A loaned £12 000 to friends to assist with their house purchase.
A formal legal charge was registered on the property in Mr A’s sole name stating that the advance represented 30% of the cost of purchase namely £40 000 and the repayment sum should represent the same percentage of the property’s sale price.
Mr A died in February 2019 when the market value of the property was £180 000 and the legal charge was formally transferred to his widow Mrs A.
In May 2020 the property was sold for £200 000 and Mrs A received £60 000 representing loan repayment £12 000 and gain £48 000. Please may we have readers’ thoughts regarding:
- inheritance tax and probate value of the legal charge for Mr A in February 2019;
- capital gains tax treatment for Mrs A including the nature of the asset...
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