CGT Questions

Chesnut

Hi all,

Longtime lurker and first time poster here!

I'd appreciate your advice in helping me to understand CGT implications of selling a second property.

This not regarding me but my parents. They purchased a second property in 2014 and have recently sold it, they were joint tenants and I'm a bit confused about how the CGT is calculated.

On the government website it says "If you own property jointly with other people, work out the gain for the share that you own".

I did read about couples combining their tax free allowance, but as they both owned it jointly (which I believe means they both own 100%) how do they submit each of their tax returns? One parent is a higher rate taxpayer and the other is the standard rate so can the standard rate one just submit a return for the entire gain?

Thanks
Chesnut

AnotherJoe

Chesnut wrote: »

Hi all,

Longtime lurker and first time poster here!

I'd appreciate your advice in helping me to understand CGT implications of selling a second property.

This not regarding me but my parents. They purchased a second property in 2014 and have recently sold it, they were joint tenants and I'm a bit confused about how the CGT is calculated.

On the government website it says "If you own property jointly with other people, work out the gain for the share that you own".

I did read about couples combining their tax free allowance, but as they both owned it jointly (which I believe means they both own 100%) how do they submit each of their tax returns? One parent is a higher rate taxpayer and the other is the standard rate so can the standard rate one just submit a return for the entire gain?

Thanks
Chesnut

Not really. From the POV of CGT it means 50/50 as a starting point unless otherwise stated.
They could have made a declaration at the outset that it was owned in a particular ratio, perhaps 90/10 or even 99/1. However I strongly suspect they cant do that retrospectively.



The simple way is take the gain, subtract all costs (legal, EAs, stamp duty etc), halve the resulting figure and each then puts that on their tax return.

Do you know roughly what the numbers look like? Also each gets about £11,500 allowance so they arent taxed on the whole amount of gain.
I believe it gets more complicated if they let it out. Did they do that?

Chesnut

Hi,

Thank you for the reply.

AnotherJoe wrote: »

Not really. The simple way is take the gain, subtract all costs (legal, EAs, stamp duty etc), halve the resulting figure and each then puts that on their tax return.

- so would they put the entire amount on each tax return or 50% each?

No, they didn't let it out and the amount of gain is around £50k (or is it £25k each)?

Thanks
Chesnut

00ec25

Chesnut wrote: »

Hi,

Thank you for the reply.

- so would they put the entire amount on each tax return or 50% each?

No, they didn't let it out and the amount of gain is around £50k (or is it £25k each)?

Thanks
Chesnut

they would put the share they own on their respective tax returns, so if that is 50% then they put 50%

technically they are also supposed to fill in tone of the "free text" boxes and state in words that they are declaring their share re the property at xxx address. When HMRC then come to match the sales records with the tax return they can link up both tax returns and ensure that 100% has been declared by adding both together themselves.

sounds like your parents should be doing their own research (or paying an accountant to do their tax returns for them)

AnotherJoe

Chesnut wrote: »

Hi,

Thank you for the reply.

- so would they put the entire amount on each tax return or 50% each?


50% assuming they arent going to try and claim it was always 10:90 % or some other figure.

I dont know what the legality of that is.


No, they didn't let it out and the amount of gain is around £50k (or is it £25k each)?


£25k is 50% of £50k, so yes, £25k. Otherwise they would each be paying tax on the whole capital gain. Not a good idea. :eek:



Really, with that level of understanding i suggest they see a tax specialist accountant and spend ? £250 ? to get some guidance.


Thanks
Chesnut

HTH added text