Trust deed- capital gains tax ?

nisadave

Update
Good news....Just recieved communication fro the council,They have accepted the trust deed and my father will recieve help with his carehome costs
Bad News....My father recieved less than satisfactory care in the Nursing home,He is now in hospital with a subdural hematoma and is incapable of signing the land registry transfer form and i would think the chances of me getting power of attorney are negligible as well.

John_Pierpoint

Sounds nasty

http://www.brainandspine.org.uk/helpline/information_sheets/subdural_haematoma/index.html

Good luck to you and your family.

nisadave

Thanks again guys
Dad is stable but is too ill to have an op at the moment plus he isn't eating,But he may not need op as these thing can get better all by themselves, (He Had a fall in the Nursing home and they didn't take him to hospital for 12 days!!!!!) I am taking legal advice on that.
I agree the capital gains tax position seems to be clear regarding bare trusts,I am waiting to see next weeks budget before making a decision on either selling the house or maybe letting it until the next government gets in and gives us more favourable CGT tax rules (That's unless Mr Cameron is really nice to us)
So it's a waiting game on all issues for the moment
Regarding the CGT,When the house is sold will the land registry inform the taxman or do i have to inform them and fill in a self assesment ? At the moment all my tax afairs are covered under PAYE.

John_Pierpoint

You have an annual allowance (nil rate band) of 10.100 so if you look like making more than that, consider giving half of the asset to your "legal partner" ie spouse for most people) free of tax and then sell it.

I tried taking the attitude that there is two sorts of tax: Income Tax and Capital Gains Tax; so I filled in the Income Tax return and wrote a nice letter about the capital disposal of more than 4 x nil rate band (ie 40,400 at present) explaining that I did not owe any tax.
Well it did not work! The tax man sat on my return until Xmas and then sent the whole wad back saying it had not been correctly completed and enclosing the CGT form. (ie I had a month before they fined me!)
I tried to protest that I clearly did not have any tax to pay.
"Only the inspector can make that decision, so fill in the form and do the calculations" :mad:

I have no idea how HMRC catch up with second home owners selling - but I'm sure, with some of the big capital gains on the average domestic property, I'm sure they must have a method of checking.

johncarlton

Be very careful with parents assets if they go into a carehome.

A friend transfered the house into his name first as the government would of took the equity to cover costs.

This worked out the best option even though he will incur capital gains tax.

nisadave

John can i really give half the house to my wife and will the taxman allow that,Also do i have to fill a self assesment form in for the year in which the house is sold.

John_Pierpoint

You need to talk to a lawyer/accountant to check that there has not been a change in the rules.

You also have the problem that your father probably does not currently have the capacity to transfer the legal owner ship into your name (so that you could simply fill in a form pay a modest fee and transfer by gift half the value (and 10,100 of previously taxable gain) into your wife's tax return.

I was in this situation about 15 years ago, where 3 of us had inherited 1/2 and 2x1/4 of an interest in land some years before.
The relative with 50% of the interest lived abroad in a part of the world where it might not be advisable to appear to be "rich" (ie Western) to the local authorities - that is one of the reasons why the bare trust was still in place.

And I had a wife.

The overseas resident did not have to pay CGT anyway and nor did I & my wife after I had reduced my interest to 12.5%. I just signed a deed giving half of my beneficial interest to my wife before the land was sold.

It worked for me then but the rules are being changed constantly - you may find for example that this sort of thing now has to be registered?

Oh yes, you also need to be able to trust your wife; 'cos it is now her money.;)

John_Pierpoint

Jimmo (an experienced poster on this section of the forum) has pointed out this posting:
https://forums.moneysavingexpert.com/discussion/comment/25323907#Comment_25323907

You can disregard the comment about the now obsolete HIP but you do have the problem of Dad not being able to sign the transfer/sale paperwork

A few years ago HMRC was given powers to disregard transactions that had no commercial logic. This was motivated by some clever circular transactions involving individuals and companies and designed to launder out normal tax liabilities.

This posting looks to me like an "Entitlement Attitude by State Employees" sometimes known a "mission creep". It is the same sort of thing as the police saying they have the right to film ordinary citizens about their normal business under the "prevention of terrorism act".
Well actually they don't unless they can demonstrate a real threat to life and property.

However you don't want to be the first to appeal to the House of Lords so proceed with care.

Perhaps you should rent out the house in the immediate future?

nisadave

John in the example you gave me above you mentioned that the person living abroad did not have to pay CGT.We are in the process of emigrating (early Retirement) if i am living abroad and sell my dads house does that mean i would be exempt from CGT or am i missing something.

John_Pierpoint

You have to have emigrated for 5 years.
The country, to which you go, may have its own rules for taxing your world wide income.

Death & Taxes:eek: