CGT on gifted first property?

StarsDie

What if for example I were to have the property signed solely to me before completion, then I move in? I could then mortgage to pay off the debt and put aside a sum for my brothers share and transfer it to him as a gift in a few years time.

getmore4less

StarsDie wrote: »

What if for example I were to have the property signed solely to me before completion, then I move in? I could then mortgage to pay off the debt and put aside a sum for my brothers share and transfer it to him as a gift in a few years time.

Before completion of what?

Any disposal incurs a CGT assesment even if for no consideration.

So if the house is signed over to you the brother needs to do an CGT assesment on their share, as it is valued at £140k thats the value used.


The simplest way to avoid CGT is to not sell or the owners die.

zygurat789

StarsDie wrote: »

What if for example I were to have the property signed solely to me before completion, then I move in? I could then mortgage to pay off the debt and put aside a sum for my brothers share and transfer it to him as a gift in a few years time.

See post #10 above.
When one of you disposes of his/her interest in the property by whatever means it triggers a chargeable event and he/she may have a capital gain and may have to pay capital gains tax on it (see above)

But first have you established that there is a capital gains tax liability on the property?

StarsDie

I will contact HMRC soon and find out. Such a shame if we have to pay CGT since we have worked so hard to get a deposit on our own homes. It's been 7 years of hard work and one major expense with very little return and even more so after CGT.

getmore4less

StarsDie wrote: »

I will contact HMRC soon and find out. Such a shame if we have to pay CGT since we have worked so hard to get a deposit on our own homes. It's been 7 years of hard work and one major expense with very little return and even more so after CGT.

Should have made it habitable and moved in so it was your home.

Otherwise it is just a business that gets taxed on the profits.

So you can probaly offsett quite a lot of the costs of improving the place.

depending what you spent nd the CGT allowance there may not be that much tax. and some of that can be mitigated if you move in and make it your home.

7 years ago was the time to look at the tax issues.

zygurat789

StarsDie wrote: »

I will contact HMRC soon and find out. Such a shame if we have to pay CGT since we have worked so hard to get a deposit on our own homes. It's been 7 years of hard work and one major expense with very little return and even more so after CGT.

What do you think they will tell you?

adouglasmhor

molerat wrote: »

Yous ...........

Yous are female sheep.

zygurat789

adouglasmhor wrote: »

Yous are female sheep.

Tup tup....:j

holly_hobby

If it was purchased as a business asset with the express intent to make a profit (ie as demonstrated in the case of property developers), they would be actually be liable to income tax on any gain, not CGT.

As it stands, they inherited the property, which upon trasnfer required upgrading to make it habital/enable the best possible chance of disposal, as a result of its inheritance - so the gain will treated under CGT regs.

If they had habited it within 12 mths of ownership (24 mths by express HMRC permission), citing habitation delay due to extentsive refurb, then it would have qualified under PRR - as it stands neither this, nor any nomination appears to have taken place ... so they remain CGT vunerable.

With regards to your CGT exposure OP, even if you dispose out without qualifiaction to any PRR relief, there are various other deductions that you may apply to each of your gross gain, such as cost of improvements relevant to monetary cost to each individual whom funded the works (full audit trail of receipts), as well as disposal costs and associated professional fees, carry forward of prev reported (within prev 4 yrs) CGT losses and of course your annual unused CGT exempt amount of £10,900 for 2013/14 - so, from your comments re low return, you may well find that the actual net gain exposed to taxation may not be bank breaking.

Hope this helps

Holly

StarsDie

The problem is we never thought to retain invoices so calculating our expenses will be near impossible. The funds were also loaned from many sources making it very difficult to trace. Is it likely costs will be estimated? Or anything we cannot prove we get taxed for?