capital gains tax

JacciD

My partners sister and i took out a mortgage on his and my home 10 years ago (he couldn't get a mortgage at that time). only he and i have ever lived in it and paid the mortgage. We have never paid her any rent.
Now we want to sell.
How will she stand on capital gains tax as it is not her home?

spadoosh

As far as im aware, she will be liable for it. Having not lived in the property.

However htere are loads of exemptions and seeing as she isnt making money she shouldnt have to pay any. I have a feeling the mortgage documents will be the answer to this. What does it say in regards to ownership of the property? Is it 50/50 or is she a guarantoor? or have you full ownership with her named on the mortgage?!

Obviously i would try an make sure she doesnt pay anything if there are costs involved.

JacciD

It is just a 50/50 but i put in half as a deposit to start with and my partner has paid the mortage all these years. she has not paid in nor taken out.

spadoosh

To completely avoid any questions about tax, could you not transfer the deeds from her to solely you, then add your husband/partner. At least i think it would, theres no transfer of money that way so no one is technicaly gaining.

JacciD

I thought yoy could only do that "GIFT" thing within 7 years of a sale

00ec25

Ignore everything that has been said so far, the only correct statement is that she is liable

Who contributed what as a deposit or paid what in mortgage or rent is utterly irrelevant, the only relevant fact is who owns what % and you state this is 50/50 split between you and her (your partner is not an owner).

So her gain is the difference between 50% of its original purchase price and 50% of its eventual sale price (less costs of buying and selling it). That is the taxable gain. She has no available exemptions but is allowed her personal allowance of £10,600 against her share of the gain.

If you try transferring it, this is classed as a CGT “disposal event” and will mean the CGT charge is immediately payable based on the open market value at that time, she cannot evade it by saying no money changes hands


The 7 year rule has nothing to do with CGT - it refers to inheritancne tax only