Capital Gains Tax Advice Please

NW_London

I've been reading guides online and trying to make sense of the rules on CGT but I'm still not sure if I'm liable to pay CGT.

My parents transferred ownership of their main house to me and my sister back in 2015. My sister used it as her main residence for a couple of months and since then it has been let out. Now we want to sell it. The increase in value since the transfer of ownership is around £200k.

Do we need to pay CGT? If yes, how much or how can I calculate it?

Thanks

xylophone

Your parents made you and your sister a gift of their PPR. Presumably the house was valued at that time so that your parents could keep a note with their wills of the PET.

You have never lived in the property, and your sister lived there for only a couple of months before the property was let out.

It would appear that you will each have a CGT bill.

https://www.gov.uk/tax-sell-property/work-out-your-gain

Keep_pedalling

If your sister had another property that was her primary residence while she spent 2 months in your parents old house then she will won't be able to claim any relief either.

NW_London

xylophone wrote: »

Your parents made you and your sister a gift of their PPR. Presumably the house was valued at that time so that your parents could keep a note with their wills of the PET.

You have never lived in the property, and your sister lived there for only a couple of months before the property was let out.

It would appear that you will each have a CGT bill.

https://www.gov.uk/tax-sell-property/work-out-your-gain

eggha wrote: »

assuming the ownership is split 50/50 between you and your sister then each of you calculates your respective CGT liability based on your respective share of the gain

sister - as she lived there for a period her calculation will be very different to yours as she can claim some tax relief which you cannot. Given she became an owner as recently as 2015 it is possible that she will have little or no CGT to pay as her share of the gain will be substantially (or fully) covered by her available relief (private residence relief of 18 months and her personal allowance). She can find out how to do that herself since it requires a lot more info than you have given

you - based on a 200k gain (which as Xylophone says may or may not be accurate) and 50/50 joint ownership assumption, your share would would be 100k. The only relief you would have is the CGT personal allowance of 11,100 leaving you with a net taxable gain of 88,900 on which you will pay some tax at 18% and the rest at 28% depending on whether you are a basic rate income taxpayer or not. To get a better illustration you would need to state what is your total income subject to income tax (salary, interest, dividends etc)

Keep_pedalling wrote: »

If your sister had another property that was her primary residence while she spent 2 months in your parents old house then she will won't be able to claim any relief either.

Thanks for the responses so far. Some more info:

I'm not taking any of the sale proceedings, it will all go to my sister. I'm a higher rate tax payer, sister is unemployed. The house was home to my parents and sister until the transfer at which point parents moved out and sister carried on living there until she found tenants. At the time it was her main residence but now she has moved out.

With this in mind, I'm assuming I won't be liable for any CGT and possibly my sister too or little CGT?

System

NW_London wrote: »

I'm not taking any of the sale proceedings, it will all go to my sister.

Presumably that would be considered a gift from you to your sister?
I'm not sure you can escape tax on disposals simply by giving something away?

Brighty

Clifford_Pope wrote: »

Presumably that would be considered a gift from you to your sister?
I'm not sure you can escape tax on disposals simply by giving something away?

Exactly what i was about to say, just because you've decided to give your half of the sale proceeds away, doesn't avoid the fact, assuming you own 50%, that you've made a £100k capital gain, which will be taxable