Capital gains tax on property?

seashore22

I've just put this question on the house selling forum, but think it may be better on here. Hope I'm not breaking any rules.

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? Thought it sounded too good to be true.

The property was bought approx 30 years ago for £9,000.

We have also just paid out for a lease extension. Could this be used to reduce the amount of CGT payable?

As it happens I've had some great advice on the other thread, so please just ignore this one. Thanks.

roger_c

Ok so I see it like this:-

Proceeds from sale, say £58,000 (after costs of selling)
Actual cost = (£9,000) 1982
Gain = £49,000

Your husband's share of the gain = £16,333 (1/3 of 49,000)
Less his annual exemption = (10,600)
Taxable gain = 5,733

Depending on his level of income this will be taxable at either 28% (£1,605) of 18% (£1,031).

This assumes that he and his sisters purchased it for £9,000 in 1982, and didn't, for example, inherit it from their parents at a later date. If they inherited it their cost would be the market value at the date of the death of the parent.

You cannot carry forward the capital gains tax annual allowance from earlier years. Nor can you offset the cost of your (assuming) personal lease extension. However, he could offset any capital losses brought forward from earlier tax years, if he has any.

Would it be possible for your husband to split his share of the property with you now? That way you would have the use of two annual exemptions (yours and his) and therefore no capital gains tax liability! Assets can be passed between spouses at 'no gain/no loss', and your share would be simply half his original cost and half his proceeds. If your sister's in law have spouses they would maybe want to do the same thing, but it MUST be done before the sale is even contemplated!

... spousal transfers one of the simplest bits of tax planning available!

Hope that helps.

seashore22

Thank you for the advice. I will look into that and see if it is something that the owners would be happy to do. Not sure if there is enough time to get that sorted, as we don't want to hold up the sale.