CGT advice

m5rcc

I appreciate that this is a forum and 'tax advice' should be sought through appropriate channels but just need some advice on a situation that my friendhas gone through.
I have afriend who bought a property in 2006 along with her husband and daughter wherebythey each 'own' a third of it. The deeds show this.

Now, she wishes to sell the property and she realises now that they are allliable to three separate CGT bills.

Without obviously advocating any form of tax evasion, is there any legal, avoidable way to reduce the CGT liability here? I was thinking of 'gifting' theshare of the property to one person or 'selling' it at a loss but that mightnot be totally legitimate!

Any ideas would be greatly appreciated.

CLAPTON

did any of them actually live in the property?

have / will they actually made a profit? if so how much?

m5rcc

CLAPTON wrote: »

did any of them actually live in the property?

have / will they actually made a profit? if so how much?

They all continue to live in the property.

They shall make a profit if they do sell, especially if they extend it to a third bedroom and buy out the freehold.

CLAPTON

there is no cgt payable if you sell your principal private residence .. i.e the property you actually live in

so if they all live there as their main (or only) home then there is no cgt payable on sale

m5rcc

CLAPTON wrote: »

there is no cgt payable if you sell your principal private residence .. i.e the property you actually live in

so if they all live there as their main (or only) home then there is no cgt payable on sale

CORRECTION: Only the daughter lives there AND on a right-to-buy mortgage.

xylophone

This is the daughter's PPR so no CGT- however, there may be CGT due from each of the parents.
http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm
http://www.hmrc.gov.uk/cgt/

They should read the above.

zygurat789

m5rcc wrote: »

I appreciate that this is a forum and 'tax advice' should be sought through appropriate channels but just need some advice on a situation that my friendhas gone through.
I have afriend who bought a property in 2006 along with her husband and daughter wherebythey each 'own' a third of it. The deeds show this.

Now, she wishes to sell the property and she realises now that they are allliable to three separate CGT bills.

Without obviously advocating any form of tax evasion, is there any legal, avoidable way to reduce the CGT liability here? I was thinking of 'gifting' theshare of the property to one person or 'selling' it at a loss but that mightnot be totally legitimate!

Any ideas would be greatly appreciated.

Do they ALL wish to sell the property because any one of them could refuse.
You now know there will only be two CGT liabilities.
Any CGT liability will be:-
The net sale proceeds after all fees, usually the money actually received
Less
1. the original cost, including all fees
2. the cost of any improvements as opposed to repairs, including all fees

The "profit" will then be divided into thirds for each party to deal with accordingly.
Since the first £10,900 is exempt there will be no CGT payable if the total "profit" is £32,700 or less so long as the parents do not have any other CGT profits in that tax year.
For every £1000 of profit over that amount the CGT payable would be £120 if the parents both pay tax at 20% and £187 if they both pay tax at 40%
and £153 if the pay tax at different rates.

jimmo

Have you considered who are the beneficial owners of the property as opposed to the legal owners?
Why did the 3 people buy the property jointly?
Did all 3 contribute to the deposit and each pay 1/3rd of the mortgage?

Or were the parents’ names just put on the deeds to help their daughter get a mortgage?
How are the sale proceeds going to be shared out?

http://www.hmrc.gov.uk/manuals/cgmanual/CG70230.htm