Liable to CGT

CLAPTON

00ec25... thanks for that.. I didn't notice the OP saying 'purchase'


smoke77 : having read your other post on the same subject; the purchase of your property has nothing to do with the sale of your father's property for cgt purchases
mortgages on the property have nothing to do with cgt either

taxing

All good advice, but can't quite see if the possibility of your father transferring a share in the property to his wife before they then both jointly give the house to to you has been raised - if not, then and if your timing allows, their joint ownership could achieve two lots of annual exemption against the gain. His solicitor will know what to do. (Husband and wife - or legal partners - transfers are given favoured tax treatment and no gain arises)

Also, you haven't said if your father ever lived in the property as his principal private residence (HMRCs term for his home) as that would count for tax and would help reduce his tax. If he did, and he had also charged you rent (and declared it for tax) during your occupation then there is the possibilty of more tax relief being due (Lettings Relief).

Regards

silvercar

All good advice, but can't quite see if the possibility of your father transferring a share in the property to his wife before they then both jointly give the house to to you has been raised - if not, then and if your timing allows, their joint ownership could achieve two lots of annual exemption against the gain. His solicitor will know what to do. (Husband and wife - or legal partners - transfers are given favoured tax treatment and no gain arises)

Good point.

Also with some quick work before the end of this tax year, your father could transfer half to the wife and then they could both transfer £10,100's worth of the property to you in this tax year to utilise their CGT allowance for 2010-11.

Although it would look like you are doing this to avoid a tax bill, you are doing it in a legal way to utilise allowances.

John_Pierpoint

There have been some examples on here of HMRC challenging the concept of transferring half a property to a spouse or legal partner and then selling it.

ceeforcat

There certainly has John - HMRC will challenge if they see the transfer into joint names as nothing other than a tax saving exercise. I have two cases of this in the last three years. If the transfer is about to go through, do not do it!

taxing

ceeforcat wrote: »

There certainly has John - HMRC will challenge if they see the transfer into joint names as nothing other than a tax saving exercise. I have two cases of this in the last three years. If the transfer is about to go through, do not do it!

If the transfer is legally done (proper transfer of title - or properly executed Declaration of Trust), and is all done before the contract for sale is agreed, it is valid for tax. Doesn't matter if it saves them tax or not - just has to be legally executed.

Regards

John_Pierpoint

More "mission creep" ?

ceeforcat

taxing wrote: »

If the transfer is legally done (proper transfer of title - or properly executed Declaration of Trust), and is all done before the contract for sale is agreed, it is valid for tax. Doesn't matter if it saves them tax or not - just has to be legally executed.

Regards

No - please do not do this until you have read this.


http://www.taxexpert.co.uk/property_tax/cgt_property.php

ceeforcat

John_Pierpoint wrote: »

More "mission creep" ?

You will have to explain this one to me John.

By the way has no-one else experienced similar challenges by HMRC or is it only me?

SilverSix

I haven't been following this closely but just skimmed.

If it's all above board and your father & his wife each pull their GCT allowances £20,200 in total don't forget that after the 5/6th of April they can then do this again as it will be in the next tax year, should it suit you all to do so.