Capital gains tax on property?

seashore22

Not too sure if this is the right forum for this question.

My husband is in the process of selling a property, which he owns jointly with his two sisters. The property is likely to sell for approx £59,000.

There will obviously be selling costs and then the amount will be split 3 ways. I know that there is a capital gains allowance of about £10,600. However is it possible to carry over previous years allowance? I researched this some time ago and I'm sure I read that you could, but now can't find it. Was I dreaming this?

Mojisola

Will there be a CTG issue? It's only paid on the increase in value between when the property was owned/inherited and the current price. In this case, the increase would then be divided between three people and each one has an allowance.

seashore22

The property was bought about 30 years ago for £9,000 and now being sold for £59,000. There will definitely be CGT to be paid unfortunately.

martinsurrey

edit for your reply,

was it bought by the 3 siblings 30 years ago, or their parents?

was this house in inheritance?

Fire_Fox

Loads of useful stuff here
http://www.hmrc.gov.uk/cgt/

seashore22

The property was bought by the 3 siblings for an older relative to live in. The relative never owned the property and they didn't pay rent to the owners. Hope that helps.

hjd

Dependent relative relief could apply if the property was purchased before 6/4/1988 and the relative was dependent throughout that time due to age (generally over 65) or infirmity.
Were these conditions met?

seashore22

Hmm, never heard of that, but not sure that it would apply in this case. The person concerned was about 60 when the property was bought and the issues concerned mental health. Might be worth a look though. Thanks.

Do you know if the dependant relative had to be 65 when the property was purchased or 65 in 1988 when this relief was withdrawn?

hjd

seashore22 wrote: »

Hmm, never heard of that, but not sure that it would apply in this case. The person concerned was not about 60 when the property was bought and the issues concerned mental health. Might be worth a look though. Thanks.

"A person is infirm if prevented from working by physical or mental illness" so might still apply.

00ec25

Dependent relatives are:
• any relative of yours or your spouse or civil partner who is incapacitated by old age or infirmity from maintaining himself or herself, or
• your own or your spouse’s or civil partner’s mother who, whether or not incapacitated, is either widowed, or living apart from her husband, or is a single woman in consequence of dissolution or annulment of marriage.

Note
There is no legal definition of `old age'. HMRC will accept that a relative is incapacitated by old age if he (or she) is

aged 65 or over
or
aged between 55 and 65, unemployed and, due to age, without the capacity to work again in his or her own industry. Note this second test is not met if the relative is unemployed because of a general lack of jobs or if, because of age, the relative chooses not to work.
http://www.hmrc.gov.uk/manuals/cgmanual/CG65575.htm

If the above applies, the property must have been purchased before 6 April 1988 and the above conditions must have applied before that date, in which case the following must also apply:
• the dependent relative must occupy the dwelling house rent free and without any other consideration
• only one dependant’s dwelling house can qualify at any one time
• a husband and wife or civil partners who are living together can claim relief for only one such dwelling house between them
• the dwelling house must be the sole residence of the dependent relative.

If you can't get dependent relative relief then please clarify the terms of ownership, by joint do you actually mean tenants in common so each has a equal rather than joint share ie. 33.33% (joint normally means 50/50)

the gain is 50,000
assuming equal shares each person is has a gain of 16.66 less 10.6 so is liable for CGT on 6,066 . There is no carry over of unused personal allowance, yes it is called an annual allowance but in this case that means one time only in each year not a rolling "annual" sum

the CGT on 6,066 would at the worst case of all at 28% be 1,698.67 leaving you 16,666 - 1.698.67 =14,967
if all of it is at 18% then you'd keep 15,574

agreed no one likes paying tax but the sums involved in this case are hardly significant

martinsurrey

http://www.hmrc.gov.uk/manuals/cgmanual/cg65550.htm

with advice about where else to look.