Joint Tenant/Capital Gains Tax

sjv

tim123456789 wrote: »

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

tim

Thanks Tim, I didn't know any of that. As far as i know a PPR has not been nominated so my girlfriend can nominate the property being sold and avoid paying CGT. That said the sisters will then be liable for the tax if they ever sold the other property. This may be a stupid question but can they not be sole owners? I know the lenders prefered it this way but i don't see the difference? It seems a little harsh to be taxed because they couldn't get a loan on their own originally.

Thanks again!

00ec25

tim123456789 wrote: »

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

tim

1) technically correct - utterly irrelevant. 2 year time limit now passed, nomination no longer possible

2) irrelevant as 2 year time limit rule still applies

therefore where there are 2 or more (as you correctly state unimpeded) properties owned, the determination of to which property PRR applies is based on the quality of occupation.
Quality requires more than pretence

SOME of the tests for quality include:
- correspondence address
- electoral roll
- social life
- where spend most time
- where do friends expect to find the OP
- where do you commute from/to
- ( irrelevantly: where does the wife live and work, kids go to school etc)
http://www.hmrc.gov.uk/manuals/cgmanual/CG64435.htm

00ec25

sjv wrote: »

Thanks Tim, I didn't know any of that. As far as i know a PPR has not been nominated so my girlfriend can nominate the property being sold and avoid paying CGT. That said the sisters will then be liable for the tax if they ever sold the other property. This may be a stupid question but can they not be sole owners? I know the lenders prefered it this way but i don't see the difference? It seems a little harsh to be taxed because they couldn't get a loan on their own originally.

Thanks again!

nomination has to be made within 2 years of first having a combination of 2 (or more) properties - so not possible now

see owning more than one home:
http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

if they now change the ownership from joint to sole that triggers a "CGT disposal event" ie the CGT calculation must be performed and any tax paid. Furthermore as they are sisters then they are "connected persons" and the value of the property used in the calculation is its full open marklet value not what one sister physically pays the other to buy them out

there is nothing harsh about the tax status. One sister has purchased a home, the other has purchased a share in an investment property and therefore is rightly liable for tax on the growth in that investment

sjv

00ec25 wrote: »

nomination has to be made within 2 years of first having a combination of 2 (or more) properties - so not possible now

see owning more than one home:

if they now change the ownership from joint to sole that triggers a "CGT disposal event" ie the CGT calculation must be performed and any tax paid. Furthermore as they are sisters then they are "connected persons" and the value of the property used in the calculation is its full open marklet value not what one sister physically pays the other to buy them out

there is nothing harsh about the tax status. One sister has purchased a home, the other has purchased a share in an investment property and therefore is rightly liable for tax on the growth in that investment

Ok fair enough but they never intended that. They thought they were each buying their own home but the joint tenant bit was the only way of securing a loan. I accept what you say, they should have known about CGT i don't think they have it when they are from?

So they are joint owners of both houses. So which house do they tax the sale of? They are selling the first one they purchased.

sjv

I think i have it. Sister 1 sells her house. Sister 2 gets taxed 18-28% on half of the profit.

When sister 2 sells, sister 1 will get taxed the same.

00ec25

sjv wrote: »

I think i have it. Sister 1 sells her house. Sister 2 gets taxed 18-28% on half of the profit.

When sister 2 sells, sister 1 will get taxed the same.

yes you've got it. But given the time scale of purchase in 2010 has there actually been much capital gain anyway?
by the time you split whatever gain there has been in half and then the liable sister takes off her 10,900 personal allowance she may not have any taxable gain remaining anyway

what sort of values are you talking about?

zzzLazyDaisy

Do bear in mind the annual CGT exemption. Depending on how much the value of the property has risen, there may not be that much CGT to pay.

tim123456789

00ec25 wrote: »

1) technically correct - utterly irrelevant. 2 year time limit now passed, nomination no longer possible

OK so now you are saying that I made a technical mistake

this is nowhere near the threshold of suggesting that they commit fraud

please withdraw that accusation

tim

00ec25

tim123456789 wrote: »

please withdraw that accusation

tim

I was responding to your first post where you did suggest fraud, it appears you need a lesson in English grammar

you placed pretend in ""
that implies that there is some doubt to the veracity of said statement. Indeed there is, it is incorrect. You suggest the OP commits fraud by "pretending" it is their PRR

QED

tim123456789

00ec25 wrote: »

it appears you need a lesson in English grammar

you placed pretend in ""
that implies that there is some doubt to the veracity of said statement. Indeed there is, it is incorrect. You suggest the OP commits fraud by "pretending" it is their PRR

QED

No that wasn't why I put it in quotes at all.

I put it quotes precisely because I considered that it wasn't a pretence.

If it was meant it to be fraudulent it would be without the quotes, wouldn't it?

Perhaps it is you who needs a lesson in English

tim