helping your child buy a property

Lord_Baltimore

CGT may seem a bitter pill to swallow but, at the end of the day, it arises as a result of your good fortune.

You are well off, happy, healthy and retired. My advice is to pay your dues and get on with your life. Don't add too much insult to injury by paying professionals to hand over your money to HMRC

macman

Am I right in thinking that you did not realise ten years ago that CGT would become payable upon the eventual sale of the property? if your gain is £100K (50% of the increase in value), then your CGT bill will be around £16K, which, gives you an overall gain of £84K-not a bad return on an investment of £125K.

silvercar

macman wrote: »

Am I right in thinking that you did not realise ten years ago that CGT would become payable upon the eventual sale of the property? if your gain is £100K (50% of the increase in value), then your CGT bill will be around £16K, which, gives you an overall gain of £84K-not a bad return on an investment of £125K.

As you lived in the property, you will be exempt from CGT on the time it was your home and the last 18 months of ownership. So roughly 2.5 yrs of the 10 are exempt ie 25% of the gain.

So you would only pay CGT on 75k. Less your CGT allowance if not used elsewhere. Leaving 64k liable. CGT rate is 18% or 28% depending on your earnings situation, so your CGT bill could be 11.5k or 17.9k.

(If you transferred half your ownership to your wife (mortgage permitting, she gains an allowance of 11k but loses the benefits from having lived in it, so her CGT calculation is based on 50-11=39k and yours on (50 x 75%= 37.5-11=26.5k) So it isn't worth the effort of transferring unless your tax rates are different.

sheramber

silvercar wrote: »

As you lived in the property, you will be exempt from CGT on the time it was your home and the last 18 months of ownership. So roughly 2.5 yrs of the 10 are exempt ie 25% of the gain.

So you would only pay CGT on 75k. Less your CGT allowance if not used elsewhere. Leaving 64k liable. CGT rate is 18% or 28% depending on your earnings situation, so your CGT bill could be 11.5k or 17.9k.

(If you transferred half your ownership to your wife (mortgage permitting, she gains an allowance of 11k but loses the benefits from having lived in it, so her CGT calculation is based on 50-11=39k and yours on (50 x 75%= 37.5-11=26.5k) So it isn't worth the effort of transferring unless your tax rates are different.

Just to confirm one point: For the first year as I was working in the area at the time, so I stayed Mon-Fri. At no time was it my main residence.

Does the above still apply?

oliver_mead

[FONT=&quot]Thanks to macman and silvercar for actually reading the details I gave. You are dead right about[/FONT][FONT=&quot] my ignorance. I did not realise until last week that CGT would become payable upon the eventual sale of the property. It was my son’s aim to eventually pay me back what I had paid out and then split the difference. This would then give me something in return for losing out on the lost interest. Using your rough figures added to other costs, it looks like I will just about break even, comparing lost interest against CGT etc. As the man say's[/FONT][FONT=&quot] ‘You are well off, happy, healthy and retired. My advice is to pay your dues and get on with your life’. And of course my son in on the housing ladder! Which is more than a lot of youngsters nowadays! Thanks to all who have shown me where I went Wrong[/FONT][FONT=&quot][/FONT]

[FONT=&quot][/FONT][FONT=&quot][/FONT]