Transferring property back to parents name / Paying Capital Gains Tax

silvercar

kaznwood wrote: »

Forgot to mention the property was valued at £78k when transferred.

So you sell for 200k lets say. The gain is 200-78=122. less transfer and selling costs, so the net gain could be 116. If I read you correctly the property is now in the name of you and your brother and your spouses, so you each declare a gain of 115/4=29k.

From this you can deduct your CGT alowance if not used elsewhere. So 29-10.1=18.9k gain.

This would be entered on your tax return for the year in question and the tax paid by 31 Jan of the following year. So if you sold after 5 April 2010, you include it on your 2010-11 tax return and pay the tax by 31.1.12. The tax individually would be 18.9k x 18%= £3,402. So the whole exercise has cost you 4 x 3402 = £13,608.

Although difficult to swallow, this could have prevented you paying much higher tax. The general view is that 18% is a very low rate of tax and could increase in the future.

kaznwood

silvercar wrote: »

So you sell for 200k lets say. The gain is 200-78=122. less transfer and selling costs, so the net gain could be 116. If I read you correctly the property is now in the name of you and your brother and your spouses, so you each declare a gain of 115/4=29k.

From this you can deduct your CGT alowance if not used elsewhere. So 29-10.1=18.9k gain.

This would be entered on your tax return for the year in question and the tax paid by 31 Jan of the following year. So if you sold after 5 April 2010, you include it on your 2010-11 tax return and pay the tax by 31.1.12. The tax individually would be 18.9k x 18%= £3,402. So the whole exercise has cost you 4 x 3402 = £13,608.

Although difficult to swallow, this could have prevented you paying much higher tax. The general view is that 18% is a very low rate of tax and could increase in the future.

I did not realise you deducted the initial amount worth from the CGT figure. This is not as bad as initially thought, although still £13k down on the deal, but as you say it could be worse and it will need to be done eventually.