Girlfriend is selling house but .....

wytco0

My girlfirend and I have separate houses, mine is in my name only and has no mortgage.

Hers has both of our names on the mortgage as she could not get a big enough mortgage on her salary alone.

She now wants to sell her house but is worried that she might end up having to pay tax on the sale as its not MY main place of residence. We each live in our own place but often stay with each other.

Does anyone know what happens in cases like this and the best way of minimising costs.

Doozergirl

When did you both buy it? How much for and what is it worth now?

wytco0

Doozergirl wrote: »

When did you both buy it? How much for and what is it worth now?

Approx 2001 for 210k now worth about 355k.

p00hsticks

When you say that both your names are on the mortgage, presumably you are also implying that both your names are on the deeds - i.e, you jointly own the house ?

Assuming that's the case, it's not her that would end up paying tax, it's you! You'd be liable to CTG on your share of the profit though as you haven't lived in it.

Doozergirl

Ouch. In theory, depending on what % of the property you own then as it isn't your main residence then CGT would be payable. Her proportion, based on the fact that it is her home, is def not taxable. Whether you can argue that it is your main residence due to the fact that it's your only mortgage I dont know

How much tax would be payable I'm not good at, at all. I need an accountant for that stuff. Hopefully silvercar or the likes will help - she's really good at this stuff

Or post on the cutting tax board!

wytco0

p00hsticks wrote: »

When you say that both your names are on the mortgage, presumably you are also implying that both your names are on the deeds - i.e, you jointly own the house ?

Assuming that's the case, it's not her that would end up paying tax, it's you! You'd be liable to CTG on your share of the profit though as you haven't lived in it.

Not sure I understand this completly? I think the deed probably have both names on then, not because I wanted it that way buit because I assume that the bank would have insisted on it and we are both named on the Mortgage.

wytco0

Doozergirl wrote: »

Ouch. In theory, depending on what % of the property you own then as it isn't your main residence then CGT would be payable.

I don't think I like the sound of this !

Doozergirl wrote: »

Her proportion, based on the fact that it is her home, is def not taxable. Whether you can argue that it is your main residence due to the fact that it's your only mortgage I dont know

We have never discussed the proportion I own, its her house I was just paying some of the mortgage, I dont want any of the procedes of the sale. I always assumed that she owned 100%, how is this decided?

Doozergirl wrote: »

How much tax would be payable I'm not good at, at all. I need an accountant for that stuff. Hopefully silvercar or the likes will help - she's really good at this stuff

Or post on the cutting tax board!

What can I do to make sure I don't have to pay any tax on her house? and preferably so that she doesn't either?

silvercar

You called

If you only put the property in joint names so that she could get a mortgage and she has paid all the mortgage and maintained the property, there is an arguement that the revenue have been known to accept, that it was only in joint names to get the mortgage but she is the beneficial owner of the property and hence no CGT liability as it is her main home.

If you have been contributing to the mortgage and/or the property then that arguement doesn't wash and you would have a liability.

I don't know enough about whether the revenue would accept a 99%:1% split or anything like that. Try the tax board, if jimmo is around he is a CGT expert.

On the face of it, if the property is owned 50:50, you have half the gain (355-210)=145, less half the buying and selling costs so say 142k,which should be halved as pointed out later by others then take off your CGT allowance £10,200, leaves you with a liability on [STRIKE]131.8k [/STRIKE]60.8kall to be taxed at 18% so a bill of [STRIKE]£23,724 [/STRIKE]nearly 11k :eek:

Doozergirl

silvercar wrote: »

You called

:kisses3:

You can take the size of that bill home with you though, girl! Does sound promising on the contribution front though

wytco0

silvercar wrote: »

You called

If you only put the property in joint names so that she could get a mortgage and she has paid all the mortgage and maintained the property, there is an arguement that the revenue have been known to accept, that it was only in joint names to get the mortgage but she is the beneficial owner of the property and hence no CGT liability as it is her main home.

If you have been contributing to the mortgage and/or the property then that arguement doesn't wash and you would have a liability.

I don't know enough about whether the revenue would accept a 99%:1% split or anything like that. Try the tax board, if jimmo is around he is a CGT expert.

On the face of it, if the property is owned 50:50, you have half the gain (355-210)=145, less half the buying and selling costs so say 142k, then take off your CGT allowance £10,200, leaves you with a liability on 131.8k all to be taxed at 18% so a bill of £23,724 :eek:

Silvercar thanks for the figures and info ... it gets worse ....

The reason its in joint name is simply so that she could get a big enough mortgage. I didnt realise it could end up with me having to pay tax.

We have a joint bank account and the mortgage payments have come out of that however she has paid most of the payments and all of the maintenance.

Is there any way that I can make it my main home while its being sold? isnt that what MPs do??

silvercar

That would be a worst case scanario. If that much was at stake I would be finding an accountant who specialises in CGT to get advice.

Whatever you do, don't make the mistake of letting the revenue think that this was your joint main residence, or you will have trouble down the line. Either the revenue will work out this is not the case from their own tax records of your affairs or, when you come to sell your property, they will sting you for CGT on the whole lot for the number of years it wasn't your main residence as you declared you lived at your girlfriends.