Avoiding CGT

SStitanic

Hi, This question might be a bit out there for this forum, but I thought Id chuck it in anyway as the reply I had on my previous savings question was ace.
So here goes..
My Brother owns a small building which he has not been using or receiving any rent from for about 6 years. (an acquaintance of his is using it for domestic storage and not paying rent)

My brother bought the property from my father for a very low price just before my father died under the condition that when he sold it his sister (ie Me) would benefit from the proceeds.

My brother isn't very well and he would like to now gift the property to me so that I can manage it and obtain rent that we can both benefit from now and later Id sell it in a few years probably.

My brother never got around to registering the title deeds as he lost them in a fire and Im in process of obtaining a copy of them from the county, I am wondering if once we get them something like adverse possession could apply so we can register the property in my name instead of his and avoid paying CGT altogether or if not can we defer CGT until I sell the property and ill pay it sometime in the future?

Thank you. :j

BoGoF

So you are considering fraud?

When your father sold the property at what appears to be below market value was any gain declared?

00ec25

have you actually read anything about the requirements to claim adverse possession? You would have better spent your time working out how to prevent the current occupant from claiming the building belongs to him since he has met the conditions for adverse possession as he already possesses it and your brother can't prove he is the owner.....

is your moral compass so warped you will ignore the bit in how to apply for adverse possession which requires you to:
"You must make the application on form ADV1 accompanied by a statement of truth or statutory declaration" ?

so leaving aside your attempt at fraud based on lies on a statement of truth, lets look at the real world of your CGT position....


1. Father died shortly after disposing of the property to his son. Son purchased at below market value
a) father and son are "connected persons" therefore the transfer from one to the other (this disposal) is deemed to be at market value, not what price was physically paid for the purposes of CGT. Your brother's CGT original cost is therefore the market value at point of acquisition, not what he paid dad.

b) father made a gift to his son equal to the discount on the purchase price paid. That gift formed part of father's estate when he later died since the clear implication is death was less than 7 years after the disposal/gift. so, were you playing morally foot loose at that time as well, or was the gift declared as part of father's estate for inheritance tax purposes? Presumably father was seeking to evade IHT in expectation of impending death so we'll assume it was not declared and the executor of father's estate didn't know about it so did not rectify that position?

2. under the condition that when he sold it his sister (ie Me) would benefit from the proceeds.
presumably this was a verbal condition of which there is now no evidence?
Had you got evidence that would enable you to make a clear claim to be a beneficial owner of the property
CGT is based on beneficial ownership, not legal ownership, so as beneficial owner how the property was split between you and brother would have saved you a load of CGT now. But if you cannot produce evidence of your entitlement to a share of the property when sold, you are back to the start point that brother is solely liable for CGT when he disposes of his property to you.
Brother's CGT will be based on current market value less original market value since you and brother are also connected persons therefore any gift/discount or actual cash changing hands will be ignored for CGT purposes.

REAL WORLD
focus on establishing your claim to beneficial (co) ownership with brother. Forget your intent to commit fraud through illegal (criminal law) evasion, not legal (civil law) CGT avoidance!

SStitanic

Your assuming aren't you and being rude TBS. so I don't even know why i'm responding, its a small unit it wasnt worth much at the time, the land has value which since the purchase date will have increased quite a lot. Ive already said happy to pay CGT but defer as we wont sell ASAP. If you can t be helpful dont bother to reply Thanks & Goodbye

SStitanic

My moral compass! I am only ignorant about the law and property. I don't go around abusing random strangers on internet forums. How about you? Oh you do, well there you go then.

Keep_pedalling

SStitanic wrote: »

Your assuming aren't you and being rude TBS. so I don't even know why i'm responding, its a small unit it wasnt worth much at the time, the land has value which since the purchase date will have increased quite a lot. Ive already said happy to pay CGT but defer as we wont sell ASAP. If you can t be helpful dont bother to reply Thanks & Goodbye

If your brother gifts the property to you then he will will immediately CG liability, it can’t be deferred until you actually sell it. If he does not have the money to pay the tax bill then he should either hold on to the asset until you are ready to sell or sell it now and keep enough back to pay the tax bill.

00ec25

SStitanic wrote: »

My moral compass! I am only ignorant about the law and property. I don't go around abusing random strangers on internet forums. How about you? Oh you do, well there you go then.

read the words you used and ask yourself what impression do they create !!!8230; how do I evade tax and claim something I know is not true? Its the same interpetation the person before me put on them.

I have given you precisely what you need to know to reduce your brother's immediate tax liability if he goes ahead with the disposal to you. Up to you if you follow it.