Capital Gain on house son occupies

brodev

I purchased a flat five years ago. It has never been occupied by myself or spouse, but it has always been occupied by my son.(that was the reason we bought it.) He is thinking of leaving it and we would then sell it. Anybody know what the capital gain cosequences will be?

Plumpud_3

It would be liable to capital gains tax as it has never been your only or main residence.

Capital gains tax is very complicated. It is based on the purchase price and the sale price of the property, less certain capital expenditure. The cost of purchase and sale is also taken into account. Then taper relief is applied.

Click here to see the helpsheet on capital gains tax for the Tax Return for the year ended 5/4/04. Whilst it will not be accurate for your circumstances, it does give you an idea to roughly calculate if any tax will be due.

http://inlandrevenue.gov.uk/pdfs/2003_04/capital_gains/sa108_notes.pdf

Remember, if you jointly own the property, the gain will be split 50:50. You therefore have two lots of the annual exempt amount.

Under the new guidelines, you may not need to complete Self Assessment Tax Returns - but you must still declare the gain.

If you require any assistance, contact your Tax Office. I would strongly advise you to phone your local Tax Office (see your phone book) and make an appointment to see an Inspector (if you don't already employ an accountant). You will need to do so after the 5th April, following the sale of the property. They will help you to calculate the capital gain, free of charge.

I hope this has made it a little clearer.

brodev

Thanks for the reply. Sorry for the delay in responding but I have been travelling for a week.