Transferring property half ownership between siblings

jsinc

My brother and I are tenants in common on an unmortgaged house originally gifted to us by parents in 2012.

It was rented out for the first year post-transfer. He's lived there for remaining ~5 years since the transfer of ownership to us.

I own my own house (since 2014) and would like to transfer my half to my brother. It would be as a gift, not for money or any other expectation.

I understand the transfer of equity in such a case isn't liable for SDLT, although plan to call Land Registry to clarify.

But would I be liable for CGT on half the property's rise in value from time we became tenants in common to time of transferring my half to him, despite not actually selling?

(Yes we should probably have thought this all through earlier)

00ec25

jsinc wrote: »

I understand the transfer of equity in such a case isn't liable for SDLT, although plan to call Land Registry to clarify.

correct,
as there is no mortgage so there is no chargeable consideration being given in return for the property share so no SDLT

see section on non cash consideration:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm03600

jsinc wrote: »

I own my own house (since 2014) and would like to transfer my half to my brother. It would be as a gift, not for money or any other expectation.

But would I be liable for CGT on half the property's rise in value from time we became tenants in common to time of transferring my half to him, despite not actually selling?

yes you are liable for CGT, it is not your main home, and never has been by the sounds of it.

so in 2012 it was gifted to you by your parents. Therefore as you and they are, in tax law terms, "connected persons", you acquired it at its then open market value despite the fact it was a zero cost gift.

your disposal of your share to your brother is again a connected person transaction so is deemed to be at current market value, and again the fact you are gifting it is ignored.

your CGT gain is therefore the difference between the 2 values. You have no other relief to offset against that gain other than whatever remains of your CGT allowance (£11,700 @ 18/19 rate) depending on whatever other gains you have in this tax year that may have already used some or all of it up.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14580

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14530

da_rule

I would not call the Land Registry for SDLT information. HMRC has its own SDLT contact centre.

Land_Registry

da_rule wrote: »

I would not call the Land Registry for SDLT information. HMRC has its own SDLT contact centre.

Yes - don't ring us re SDLT. Try HMRC via GOV.UK

Tom99

Since your brother will be gaining quite a lot ask him to pay the CGT, it will only represent a small %age of his gain.

jsinc

00ec25 wrote: »

correct,
as there is no mortgage so there is no chargeable consideration being given in return for the property share so no SDLT

see section on non cash consideration:
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm03600
yes you are liable for CGT, it is not your main home, and never has been by the sounds of it.

so in 2012 it was gifted to you by your parents. Therefore as you and they are, in tax law terms, "connected persons", you acquired it at its then open market value despite the fact it was a zero cost gift.

your disposal of your share to your brother is again a connected person transaction so is deemed to be at current market value, and again the fact you are gifting it is ignored.

your CGT gain is therefore the difference between the 2 values. You have no other relief to offset against that gain other than whatever remains of your CGT allowance (£11,700 @ 18/19 rate) depending on whatever other gains you have in this tax year that may have already used some or all of it up.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14580

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14530

Thanks for taking the time to clarify that, and the links.

Cheers for the other responses.

G_M

Tom99 wrote: »

Since your brother will be gaining quite a lot ask him to pay the CGT, it will only represent a small %age of his gain.

I think that's only fair.


Especially as for 5 years he's lived in 'your' half of the property rent-free.........

jsinc

G_M wrote: »

I think that's only fair.

Especially as for 5 years he's lived in 'your' half of the property rent-free.........

That's not a viable option at the moment. Not the taxman's concern, but I need to have a think about it and risk of a higher future liability.

G_M

jsinc wrote: »

That's not a viable option at the moment. Not the taxman's concern, but I need to have a think about it and risk of a higher future liability.

What's not a viable option? Charging him rent or asking him to pay the CGT? Or both?


Seems to me he's getting a pretty good deal........

jsinc

G_M wrote: »

What's not a viable option? Charging him rent or asking him to pay the CGT? Or both?

Seems to me he's getting a pretty good deal........

His affording the full CGT bill right now, but we need to discuss it. This isn't really about monetary fairness to me as it's family and I didn't earn the share to begin with. Paying a bill from unrealised gain is an issue, but life is less fortunate to some than others.

Tom99

jsinc wrote: »

His affording the full CGT bill right now, but we need to discuss it. This isn't really about monetary fairness to me as it's family and I didn't earn the share to begin with. Paying a bill from unrealised gain is an issue, but life is less fortunate to some than others.

[FONT=Verdana, sans-serif]Unless your brother is planning to move there can be no rush to transfer your share to him, but the CGT bill will only get larger if prices increase in the future.[/FONT]
[FONT=Verdana, sans-serif]Remember if you do the transfer now the CGT bill does not have to be paid until 31st Jan 2020, so a good 18mths away.[/FONT]
[FONT=Verdana, sans-serif]You could lend your brother the money for the CGT bill if you don't want to gift it to him.
[/FONT]