capital gain after property sale

brzone

Hello

I would like to seek for some advices as this seems to be a bit tricky and I do not have much information on tax.

I am a permanent resident in the UK married to an army personnel, and my brother was studying in the UK at a Uni. My father purchased a property close to my brother's school for me and my brother to live together as the rents have been too expensive. I moved out after marriage, and my brother has been living there alone since.

Initially my dad wanted to put my name as a owner for easier process (now I am his power of attorney) - but because inheritance is strongly discouraged by law in father's country, he had to put his name as a sole owner. Also because my father is not a full resident in the UK, he paid in full by cash after getting some loans from his country. (I wasn't able to get a loan either as i just finished my studies at the time)

So far he has been paying interests, and regularly asked for the Land Registry to send it to bank and government - as a proof of ownership - just as mortgage buyers do in the UK.

Since my brother left the UK after his studies, we are in the process of selling the property and there are capital gains around 100,000 after the offer has been accepted. And we are wondering if we still need to pay full capital gain taxes. I made some main queries as below:

1) My father has been paying monthly interests for loan to buy the property in his country. Can this generate deduction for capital gain tax?
2) Even though my father did not live in the property, his family members were living there without generating any income (He was the main supporter for my brothers school fees and living cost throughout)
3) Is he allowed to get 11,000 of annual allowance?
4) Would there be any good reasons to save the taxes?

Please advise. Thank you.

jimmo

As your father is the sole owner of the property it is he who is liable to Capital Gains Tax.
What do you mean when you say he is not a full resident in the UK? Under UK Tax Law at any given time you are either resident in the UK or not resident in the UK and the difference is probably vital in this case.
In its simplest form someone who is resident in the UK will be liable to Capital Gains Tax on the whole of the gain arising during his period of ownership but someone who is not resident will only be liable on the proportion of the gain which is attributable to the period from 6 April 2015 to the date of sale.
There are 3 alternative ways to work that out.
Details are here.
https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-calculating-taxable-gain-or-loss