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Joint Tenant/Capital Gains Tax
sjv
Posts: 10 Forumite
With a little help from thier parents my girlfriend and her sister purchased two properties in 2010. If they are joint tenants & sell one (to buy another) will they have to pay capital gains tax?
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Comments
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Is the property being sold the primary personal residence of both of them?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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Search the government website; very clear guidance including numbers and how CGT works re the tax thresholds and joint ownership http://www.hmrc.gov.uk/cgt/index.htm0
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kingstreet wrote: »Is the property being sold the primary personal residence of both of them?
or more to the point, can they "pretend" that it was.
To qualify as a PPR for CT purposes it doesn't actually have to be your PPR, but it does have to be capable of being your PPR.
(and of course, if you do claim this one as your PPR then you can't nominate a different one, for the same dates, later)
tim0 -
kingstreet wrote: »Is the property being sold the primary personal residence of both of them?
The sisters live separately. One in each of the places they purchased but they are joint tenants for both. They were advised to both be joint tenants so they could get the mortgage required.0 -
tim123456789 wrote: »or more to the point, can they "pretend" that it was.
To qualify as a PPR for CT purposes it doesn't actually have to be your PPR, but it does have to be capable of being your PPR.
(and of course, if you do claim this one as your PPR then you can't nominate a different one, for the same dates, later)
tim
So... the fact they are joint tenants doesn't matter? As long as they are living in the houses and not renting one of them out?0 -
it matters hugelySo... the fact they are joint tenants doesn't matter? As long as they are living in the houses and not renting one of them out?
ignore the poster suggesting they commit fraud
HMRC has a record that 2 people own each property but each lives separately in their own respective home. Therefore:
- the person living there as THEIR main home can get their share of the sale free of CGT liability
- the other non resident person will have a CGT liability because it has never been that person's main home
- the liability will be the difference between the original purchase price and what it sells for divided by 2 because of the joint tenancy
they seem to have been badly advised - if they each needed to be on the other's mortgage so each could buy a property then surely that works out as 2 people x2 salary = 4/2 properties, ie each person could have bought their own property on their own and CGT would have been irrelevant0 -
How long have they owned the properties? That may be relevant. If they have owned them for less than 3 years, a swift rearrangement of where they actually live is very much in orderYou might as well ask the Wizard of Oz to give you a big number as pay a Credit Referencing Agency for a so-called 'credit-score'0
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How long have they owned the properties? That may be relevant. If they have owned them for less than 3 years, a swift rearrangement of where they actually live is very much in order
One property was brought in Nov 2010 the other a couple of months after so both just under 3 years...
So the other sister should move in to the place that is being sold? What is the process for this rearrangement?0 -
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it matters hugely
ignore the poster suggesting they commit fraud
If you are referring to me, I am not.
1) For CGT purposes you may nominate any property that you have the use of as your PPR. It does not need to be the one that you occupy most frequently or even, at all. As long as there is no impediment (i.e. a tenancy agreement) stopping it from being your PPR you may nominate it. (In advance or retrospective for up to 2 years)
2) As long as they are not married (civil partners) (um, just in case it's not obvious - to each other), co owners of a property may each nominate a different PPR, of course if you are a 50% owner of a property nominating it as your PPR will only make 50% of the gain free of tax.
The above is not true for CT "main" home purposes which are completely different
tim0
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