CGT for a property jointly owned

Lyncj01

Hi,
my elderly parents have just sold a property. They lived in it as their main home for 28 years then rented it out for 11 years.

They sold it for £600k. It was valued at £60k on 31/3/1982. They have spent £45k on improvement and selling costs.

My question relates to the treatment of Letting Relief.

I believe they need to split the sold/market value and costs in 1/2 (1/2 each) then apply the private residence relief based on their time living in the property (+18 months).

Can they then EACH deduct the Letting Relief (at, in this case capped at £40k)?

This makes a big difference as it will mean no CGT if this is the case.

00ec25

yes. letting relief is per owner

see this guide I did before for the mechanics of the calculation
https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2

I note 1982 - 2019 = 38 years so 28+11 won't work. Presumably you will adjust accordingly or is there an overlap for the rental period? (note the sense check in step 3)

you seem to have picked up the key points, 50?50 assuming that is how they own it? Joint Tenants or Tenants in Common? If the latter is there a trust deed to confirm the split - presumably their income tax records for 11 years of rental would also evidence the respective beneficial ownership %

how confident are you that the 45k is genuine improvements, not repairs?

Lyncj01

Thanks!
Yes, I was just being illustrative with the dates and didn't check that they added up (and I have a degree in maths!!).
The £45k includes the selling costs (agents fees etc) and dad has kept all receipts for anything he has spent on the house. They added a garage and converted 1/2 of it to a room for example.
Two more question if I may ask - the improvements they did on the house were mainly before they rented it out - l assume these can be included, as these costs have resulted in the house being worth more when it was actually sold... which is the logic.
Also, they have been married for 60 years; and yes have split the income on their tax returns each year. Is this sufficient 'evidence' to deem the ownership is 50/50?

AnotherJoe

The default is 50/50 they'd only need evidence to prove a different split.

saajan_12

Lyncj01 wrote: »

The £45k includes the selling costs (agents fees etc) and dad has kept all receipts for anything he has spent on the house. They added a garage and converted 1/2 of it to a room for example.
Two more question if I may ask - the improvements they did on the house were mainly before they rented it out - l assume these can be included, as these costs have resulted in the house being worth more when it was actually sold... which is the logic.

The key is what exactly was teh £45k spent on. Only capital improvements and buying/selling costs are allowed, not repairs / maintenance eg
- YES new garage where there was no comparable structure previously
- NO redoing and existing garage
- NO redecorating garage into a bedroom
- NO decoration / repairs
- NO expenses claimed against income tax during rental business
- YES solicitors / agent costs to buy / sell property

00ec25

Lyncj01 wrote: »

Thanks!
Yes, I was just being illustrative with the dates and didn't check that they added up (and I have a degree in maths!!).
The £45k includes the selling costs (agents fees etc) and dad has kept all receipts for anything he has spent on the house. They added a garage and converted 1/2 of it to a room for example.
Two more question if I may ask - the improvements they did on the house were mainly before they rented it out - l assume these can be included, as these costs have resulted in the house being worth more when it was actually sold... which is the logic. correct logic but more relevantly, also how tax rules allow)
Also, they have been married for 60 years; and yes have split the income on their tax returns each year. Is this sufficient 'evidence' to deem the ownership is 50/50?

I shall labour the point passive aggressive: men from that generation did not necessarily have the wife as an owner.
Mere marriage does not entitle them to split 50/50 if he is in reality the sole owner.
If it is joint ownership then, as mentioned by others, 50/50 is the default unless you can prove otherwise.