Capital Gains Tax

creativespirit

Hi,

 I and my sibling have just sold a house that we owned 50% each. However, the proceeds were split 60% - 40%. Do we each pay CGT on 50% of the gain, or 60 - 40%?

Many thanks for any advice.

eskbanker

If the property ownership was 50/50, then I'd have thought that this is the basis of measuring the gain for CGT purposes, but at what stage and on what basis was it decided that the proceeds would be split differently?

Keep_pedalling

One of you has basically gifted 10% of the proceeds to the other, this does not change your individual CGT liabilities which will be based on 50% ownership.

creativespirit

Thanks for that

Keep_pedalling said:

One of you has basically gifted 10% of the proceeds to the other, this does not change your individual CGT liabilities which will be based on 50% ownership.

Thanks for that. If we both pay 50% tax on the gain, is the gifted 10% amount to be declared as a gift in tax return by the person who received it?

eskbanker

creativespirit said:

Thanks for that

Keep_pedalling said:

One of you has basically gifted 10% of the proceeds to the other, this does not change your individual CGT liabilities which will be based on 50% ownership.

Thanks for that. If we both pay 50% tax on the gain, is the gifted 10% amount to be declared as a gift in tax return by the person who received it?

There's no tax on gifts, so nothing to be declared on tax returns?

creativespirit

eskbanker said:

creativespirit said:

Thanks for that

Keep_pedalling said:

One of you has basically gifted 10% of the proceeds to the other, this does not change your individual CGT liabilities which will be based on 50% ownership.

Thanks for that. If we both pay 50% tax on the gain, is the gifted 10% amount to be declared as a gift in tax return by the person who received it?

There's no tax on gifts, so nothing to be declared on tax returns?

Many thanks for that.

Bookworm105

I would prefer some evidence to support taxation by legal ownership share as CGT is fundamentally based on beneficial not legal ownership shares, ie follow the money!
CG70230 - Land: legal and beneficial interests in land - HMRC internal manual - GOV.UK

CG11700P - Introduction and computation: chargeable assets: introduction: contents - HMRC internal manual - GOV.UK

what prompted the 60/40 split?
does it reflect an existing deed / declaration of trust underpinning that split?

10% of a property sale may well be enough money to push one of you into a higher rate tax bracket, so declaring 50/50 but receiving 60/40 looks like potential deliberate tax evasion