Help with Capital Gains Tax

john12111

Today I received a letter from HMRC about the capital gains tax.

This is for the property my sister sold to move onto another residential home (in chain). This was bought as a first time buyer property in 2014. It was purchased for around £189,000 and sold for £254,000 (in 2019). She now owns another (only) residential home (where she lives) which she bought after selling this property.

I was a part owner on the property because she added me to the mortgage as she couldn't get the mortgage on her own. I never lived in that property (as also stated on the HMRC letter too). I purchased my own property where I live in 2012.

As this was sold in chain, she paid the stamp duty, etc on the sale but I was not aware of the CGT and was completely taken by surprise with this letter.

Does anyone have an experience or guidance on similar situation? I did my own calculation juts to get an idea and was given a total of around £12k to pay for CGT.

Jeremy535897

If you had beneficial ownership of half the property, then you have to pay capital gains tax on that half. However, if you were the beneficial owner of half the property, you should have received half the net proceeds. I am guessing you did not?

There is some guidance here:
https://www.samconveyancing.co.uk/news/conveyancing/declaration-of-no-interest-in-property-9268

You will see that a declaration of no interest is not something you can realistically do in arrears, but it may be worth explaining the situation to HMRC, and providing evidence that you paid nothing for the property, and received nothing on its sale. If the mortgage company knew that you had no beneficial interest in the property, they may be able to confirm this to you, but if they were not aware, you might be opening a can of worms.

Your sister asked you to do this, presumably with no benefit to yourself, so morally she should refund to you any capital gains tax that is due.

john12111

Jeremy535897 said:

If you had beneficial ownership of half the property, then you have to pay capital gains tax on that half. However, if you were the beneficial owner of half the property, you should have received half the net proceeds. I am guessing you did not?

Thanks for the detailed reply and link.

Your guess is correct. I did not receive any net proceeds from the sale (nor I i paid anything towards the purchase price) as they used all the gains in their purchase of new property (where they currently live in).

Not sure if bank would have anything logged in their system to prove that. So yes it would be very difficult to collect evidences to conclude I was not a beneficial owner.

If someone has dealt with this situation and can help further, it would be appreciated.