capital gains tax - help!!!

gibby4

been refered to this forum. 1996 husband made bankrupt. Forced to sell family home to pay creditors.- but - sold to Brother-in-Law (BIL) who allowed me and my family to live in it. Now BIL wants us to buy back house. £50k outstanding on mortgage though valued at over £100 k.

My son wants to buy the property.

Is there any way of transfering ownership of property via family without going through a sale.

Will my BIL be liable for cgt and how is capital gains tax liability detected, it is a voluntary thing?

My BIL has never lived in this property with us but bought and house of his own 4 years ago.

Petmidget

You havent made clear how much your BIL paid you for it nor whether you rented it from him in meantime.

But long and short is yes CGT would kick in, a proper calc would show any potential liability. And as for detecting when the sale is carried out the Stamp Duty (which there wont be as under limit) forms will alert the IR to the transaction.

Even if he sells you it for what you paid for it, that portion which is gifted will count as additional consideration in his hands.

You may have some scope depending on curcimstances for some relief but principally you would be looking at a little bit of base cost (what your BIL paid) lift from indexation, a reasonable chunk of taper relief (about 35% depending on exact dates) and then his Annual Allowance.

2 routes I could see, if your BIL is married transfer half into his wifes name prior to sale (doubles the AA) or conduct sale in 2 parts spread across 2 separate tax years.

gibby4

BIL paid £60k in 1996 now valued £100k. have rented it from him since at £500 pm. He is not married. He wants to sell in next few months.

BIL is not trying to avoid paying ctx - just would like to know if it is our responsibility to tell someone and if so who do we inform. or does our mortgage advisor do it or do we have to employ an accountant!!!!!

When is the cgt due after conclusion of sale. - immediately ? what if BIL does not report sale of house?

dunstonh

just would like to know if it is our responsibility to tell someone and if so who do we inform. or does our mortgage advisor do it or do we have to employ an accountant!!!!!

It is his responsibility to declare it.

When is the cgt due after conclusion of sale. - immediately ?

depends if he is running it as a business or not. On the assumption it isnt and it is sold during this tax year, he has until January 2008 to pay it after declaring it in his tax return for the 06/07 tax year.

what if BIL does not report sale of house?

When the revenue find out (and they usually do), he could face court action and possibly imprisonment. Buy to let tax evasion is something that the revenue is currently focusing on.

Various people in the chain of events have a responsibility to report the transaction if they believe that tax fraud is taking place. Failure for them to report their suspicions can result in them facing imprisonment.

gibby4

thanks just what I thought