Capital Gains Tax Query

Lady_Inversneckie

My mum died 5 years ago and left a will allowing her husband to remain in the property rent free.
My mums husband was offered a pensioners house from the local Council in December '14.
He has only recently agreed to sell the house. My mums husband has a 25% share, my sister and I have 37.5% share each.
We have just obtained a Home Report so the property can be sold.

I have decided that I might buy my sister and my mums husband out. I would have to sell my own house in order to buy them out.
Selling my home and buying my mums home outright would happen on the same day and I would move into my mums as mine on the same day.

Would I be liable for Capital Gains Tax if I decide to buy my mums property totally?

I'd appreciate any advice.

Thank you

Keep_pedalling

How much was the house valued 5 years ago, and what is it worth now.

If any capital gains tax is due it will fall on your sister and step father, as they would be the selling parties.

Lady_Inversneckie

Thanks "keep pedelling".

I have also thought that I wouldn't have to pay Capital Gains Tax and had assumed my sister and my mums husband would be liable.

The house was valued at £238,000. Five Years ago.
Valued in the Home Report - £250.000.

Thanks

Mojisola

Lady_Inversneckie wrote: »

Thanks "keep pedelling".

I have also thought that I wouldn't have to pay Capital Gains Tax and had assumed my sister and my mums husband would be liable.

Why would your Mum's husband be liable for CGT? Hasn't the house been his home all this time?

Lady_Inversneckie

Hi Mojisola,

You do have a good point.

My mums husband owns 25% of the property.
He now lives in a pensioners house.

I guess he wouldn't have to pay CGT?

Just my sister perhaps?

Keep_pedalling

Mojisola wrote: »

Why would your Mum's husband be liable for CGT? Hasn't the house been his home all this time?

That is correct, sorry I was not thinking straight there. In fact based on the valuations given her gain is well under her annual allowance so no one would have any tax to pay.

booksurr

Lady_Inversneckie wrote: »

I guess he wouldn't have to pay CGT?

Just my sister perhaps?

correct, your step father moved out less than 18 months ago so gets 100% relief when he sells his 25% (ie disposes of it to you )

your sister is liable for the gain between 5 years ago (measured in months not years) and "now" valued at a) current market value as you and she are "connected persons" so must use market value minus b) probate value

Lady_Inversneckie

Thanks to everyone who has helped me on this thread.

Kind regards

neopaz

Hello everyone, I am newbie with a query about capital gains tax which I would be grateful if someone could help me with.

I purchased a property off of my sister for 10k (long story but she owed me some money, hence the small price) and I have rented it out for just over a year. The property is worth considerably more. My questions are:

1. Would I have to pay capital gains tax on the difference between what the property is worth now and the price i paid for it, or the difference between what it was worth when I purchased it and what it's worth now?

2. How long would I have to live in the property in order not to pay any capital gains tax?

Thank you in advance.

saintalan

neopaz wrote: »

Hello everyone, I am newbie with a query about capital gains tax which I would be grateful if someone could help me with.

I purchased a property off of my sister for 10k (long story but she owed me some money, hence the small price) and I have rented it out for just over a year. The property is worth considerably more. My questions are:

1. Would I have to pay capital gains tax on the difference between what the property is worth now and the price i paid for it, or the difference between what it was worth when I purchased it and what it's worth now?

2. How long would I have to live in the property in order not to pay any capital gains tax?

Thank you in advance.

Hi Neopaz welcome to the forum.

The simplest answer is, worth does not come in to it. CGT is due when a gain is realised (ie sold) based on the difference between buying and selling price.

There are allowances available to renters. If you live in the property as your main residence for at least a short period (say 6 months) then you can add 18 months to that for relief.

In this instance although you may have got a deal, you will potentially pay more CGT than if purchased at market value.

I assume there are no issues with your sister selling. Was it her primary residence and no CGT due? If not CGT may have been payable if deliberately sold below value.

Alan

booksurr

saintalan wrote: »

In this instance although you may have got a deal, you will potentially pay more CGT than if purchased at market value.

No. OP and his sister are "connected persons" (relatives) therefore the transaction between them is deemed to take place at market value not at whatever discounted (or inflated) sum of money actually passes between them.

OP's original cost for CGT purposes will be based on its then market value, not the 10k paid

saintalan wrote: »

I assume there are no issues with your sister selling. Was it her primary residence and no CGT due? If not CGT may have been payable if deliberately sold below value.
Alan

it is true that if it was her main residence then she has no CGT liability. If it wasn't she should have declared the sale and calculated if she actually has to pay any CGT after deducting whatever relief she is entitled to claim

neopaz - read the guide!!!!
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet