Capital Gains Tax

stu2500

Good afternoon, my mother purchased her mothers house via right to buy some years ago with her sister. Around 16 years' ago my mothers half of the house was signed over to her sister and kept in trust by her for me. Apologies, I don't know how to word this, but basically, my auntie owns her half and the other half is held in trust by her for me for when we come to sell it (I am 36 years old).

I now want to sell my half of the house, which we're discussing and they will either 'buy me out' or we will put it on the market. It is all amicable and a close family, therefore no disputes. There is no mortgage on the house and it is currently being rented out.

My question is, will the money I earn from the house (around £50k) be liable for capital gains tax and if so, what will the amount be? I earn roughly £45k at the moment, potentially £50k but it varis due to commission.

Thanks for any assistance.

jaybeetoo

https://www.gov.uk/trusts-taxes/trusts-and-capital-gains-tax

uptdale

First you need to clarify what kind of trust it is. If you are entitled to all the income and all the capital from that half of the house, then it looks like a "bare trust", in which case the rental income and capital gains are taxed as yours.

If you have never lived in the house as your main home since your aunt took over your mother's half share for you, then the whole of the gain would be taxed as your gain, except that £12,000 of gains in the tax year are exempt. If you have ever lived in the house as your main home since then, the taxable gain would be less (maybe quite a bit less). The rules for that kind of situation are quite complicated, and are changing for the worse on 6 April 2020. The present rules are explained here: https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2019