Payment from sale of Property

JPin

Hi All,

I have sold a rental property that I owned with two siblings, the solicitor has asked how we would like to be paid. Is it possible to have it sent to one account as there are further expenses to be removed or for CGT reasons, should this be sent to the individual accounts? We each own 1/3. 

[Deleted User]

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

JPin

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

diystarter7

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Paid in 3 ways is "easier" for any tax queries that may rise in the future especially is one or more people are not available. However as @[Deleted User] stated, you can indeed pay into one account........

Good luck.

[Deleted User]

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

JPin

[Deleted User] said:

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

What about the point above from diystarter? Is there likely to be a problem further down if the tax office asks about payment to one account when it comes to the 3 parties availing from the CGT allowance?

Jeremy535897

The documentation will clearly state the true position, although if questions are raised, it will be extra work answering them. I can think of worse issues, like paying all the money into the account of someone who then turns out to have massive debts, or who dies before distributing it. I am surprised that the solicitor wishes to do this as it exposes them to risk. The best approach is for the solicitor to make a payment on account to each owner, reserving an amount for future costs that will suffice in all foreseeable circumstances, then distribute the balance equally, in sufficient time for the tax to be calculated before the 60 day deadline.

[Deleted User]

JPin said:

[Deleted User] said:

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

What about the point above from diystarter? Is there likely to be a problem further down if the tax office asks about payment to one account when it comes to the 3 parties availing from the CGT allowance?

Not withstanding what Jeremy has said, the true position is the true position. Just because the money ends up in one account doesn’t change the fact that three joint owners have sold one third of a property and would each pay CGT based on their individual tax position, each being entitled to a CGT annual exemption. 

JPin

[Deleted User] said:

JPin said:

[Deleted User] said:

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

What about the point above from diystarter? Is there likely to be a problem further down if the tax office asks about payment to one account when it comes to the 3 parties availing from the CGT allowance?

Not withstanding what Jeremy has said, the true position is the true position. Just because the money ends up in one account doesn’t change the fact that three joint owners have sold one third of a property and would each pay CGT based on their individual tax position, each being entitled to a CGT annual exemption. 

I agree with all of your points, however, is there something I can refer my solicitor to in this point?

diystarter7

JPin said:

[Deleted User] said:

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

What about the point above from diystarter? Is there likely to be a problem further down if the tax office asks about payment to one account when it comes to the 3 parties availing from the CGT allowance?

The possible problem I was referring to was having to make clear when asked where the money came from if one or more people are not around to answer the questions or have the capacity. This is unlikely to happen but worth considering
Personally if it our money to be split into three - as it is easier all round ie not risking transferring to the wrong account, possible problems later and down to the solicitor to transfer money x 3 as long as correction account info is given, I go with the 3 way split, all done and dusted.

This also ensures that the other two do not have to chase you etc for the money I'm sure they won't and the solicitor will need their consent to send it to your account

Sorry, but whay are you against the 3 way split and apologies in advance if I've missed the obvious.

Thanks

JPin

diystarter7 said:

JPin said:

[Deleted User] said:

JPin said:

[Deleted User] said:

It can be sent to whatever account you like. The fact will remain that each will have a CGT bill based on one third of the chargeable gain. Where the money ends up is irrelevant.

That makes processing it a little easier, the solicitor felt for CGT reasons, he would need to pay it three ways and was adding additional fees to cover this. He also said that it would have to be declared within 30 days, I thought it was 60.

Your solicitor doesn’t seem to know too much in this regard. He is wrong on both counts. Sixty days is correct. The gain is also required to be declared on self-assessment tax returns by each party where full credit will be given for the amount paid under the 60 day declaration.

What about the point above from diystarter? Is there likely to be a problem further down if the tax office asks about payment to one account when it comes to the 3 parties availing from the CGT allowance?

The possible problem I was referring to was having to make clear when asked where the money came from if one or more people are not around to answer the questions or have the capacity. This is unlikely to happen but worth considering
Personally if it our money to be split into three - as it is easier all round ie not risking transferring to the wrong account, possible problems later and down to the solicitor to transfer money x 3 as long as correction account info is given, I go with the 3 way split, all done and dusted.

This also ensures that the other two do not have to chase you etc for the money I'm sure they won't and the solicitor will need their consent to send it to your account

Sorry, but whay are you against the 3 way split and apologies in advance if I've missed the obvious.

Thanks

There are a number of expenses to clear once the transfer is paid, we wanted to clear this down from the pot before doing the 3-way split. Do the tax office investigate the accounts and check subsequent payments?