Capital Gains Tax

Crofton

My sister wanted to sell her house, another came on the market before she could sell. I bought it for her, got a mortgage and when she sold hers she paid off the mortgage resulting in a mortgage free house. I want to remove my name from the deeds and replace it with hers.

I have my own property.

00ec25

you simultaneously owned 2 properties.Tthe original one of them was very obviously still your main home (I doubt you did a formal nomination of one of them for CGT purposes so we will ignore that rule) so yes you are liable for CGT

BUT , will you actually have any CGT to pay?
assuming you have no other gains in the tax year you are allowed the first £10,600 of your gain free of CGT and will only pay CGT on the amount in excess of that

However, the problem is this - you and sister arerelated so are formally called "connected persons" therefore when you sold her the house the selling price is , by law, not the value she paid you (ie the value of your mortage, but is the full open market value at the time of the "sale", your gain is therefore the full open market value minus the original purchase price you paid less the costs you incurred in purchasing it (ie legal and EA fees) and any legal fees you incurred selling it to her

if the gain is still <10,600 then you will not have to pay CGT, but you MUST declare the sale to HMRC as you are required to notify them off any transaction where the sales value is >£42,400

http://www.hmrc.gov.uk/cgt/property/calc-cgt.htm

Crofton

Ok so if I paid £105,000 for the house, and it has been 6 months now and she has just sold hers.

18% of
Will I pay £105,000 - £10,600 = £94,000

She moved in to this one leaving the other empty for a while, and lots of money was spent on doing this one up, can we off set any of that money?

What else can we do if I do not immediatly put it in her name, how about leaving it in my will?

Why £10,600 by the way? I ask because I am self employed and I get an allowance each year anyway.