Selling BTL - saving CGT?

Skint_Catt

Can anyone help? We're just about to sell my OH's BTL cottage so that we can buy a place of our own. He wants to add me as a Tenant in Common on the deeds so that we can save a bit on the CGT bill.

Will this work considering we're just about to instruct the estate agents or would I have had to be a TiC for some time?

Is there anything else we should be considering - does me being a lower rate tax payer help in any way?

Ta, C x

gallygirl

The experts will no doubt be along shortly, however from my skant knowledge:

If OH transfers 50% to you he is liable for CGT on the 50% he gives to you. On sale, you would be liable for any gains since transfer on your half & OH would be liable for CGT on his remaining 50%. Wouldn't make any difference to liability if you were doing both one after the other. However, iIf you were to do this over 2 tax years (e.g. transfer in 10/11 & sell in 11/12) then OH would have 2 yrs CG allowances.

Has OH ever lived there, in which case there would be an exemption for 3 years (e.g. own for 10 years, lived in for 1, still get 3 yrs exemption so CGT payable on 70%). Could you move into the BTL to get the exemption?

Skint_Catt

OH has never lived in it unfortunatly plus the property is now empty and has been since May 2009. We can't move in unfortunately as it's too far away for us to commute to work.
Sounds like there's no point in putting me on the deeds.
Thanks for your reply
C x

CLAPTON

marriage has advantages....are you married?

Skint_Catt

Yes, just! 3 weeks :0) What are the advantages?

clutton_2

unlimited bonking

silvercar

Skint_Catt wrote: »

Yes, just! 3 weeks :0) What are the advantages?

The your spouse can transfer to you his half without a CGT bill. If he/ she does this, you both have a £10,100 CGT allowance when you come to sell.

Under the recent changes to CGT, the tax rate is upto 28% depending on your personal tax situation - add the chargeable gain to your income and see what tax bracket the CGT falls into.

Skint_Catt

This is what we thought would be the case though I didn't know the CGT rate had changed yet - thought it was still a flat 18%

Thanks for your replies.

C x

Loopgames

Can't you sell it at a discount to a son or daughter? Avoid CGT altogether. Then they will resell later on your behalf to the open market as their own residence.

Check with an accountant or solicitor. I know a case where it was done legitimately through an apparent loop hole.

But they had their accountant on the ball with this so make sure you have a professional checking it's done properly. Otherewise you'll be chased for an outstanding bill later.

poppysarah

It might be worth speaking to an accountant/tax expert to make sure it's all done right.

jockosjungle

If you sell it at a discount to your son or daughter you will have to use market value, if he transfers half of it to you then you'll get an allowance as well. However that is the only advantage you will gain, you'll still pay tax on the whole gain but just get to offset an allowance each against it.

Be careful with schemes and loopholes, you could end up costing more when it is proved to not work and you pay the tax, interest and a large fine

R