Capital Gains Tax for a newbie!

Snowyhull

Newbie here!

just wondering if anyone can help/advise please...

Back in 2012 my parent took (which now seems to be bad advice) to add myself to the house deeds as the best way to stop there home being used if they needed care. 

I bought my own home in 2013 and obviously moved out of my patents home.

My parents and myself would now like me to be removed from the deeds. we have had some advise that states i will be liable to pay capital gains tax on the increased value of the property.

in 2012 the property was valued approx. £98,000 and now the home is valued apox £135,000.

Is this true as i have not gained financially?

Yours hopefully 

p00hsticks

Snowyhull said:

in 2012 the property was valued approx. £98,000 and now the home is valued apox £135,000.

Is this true as i have not gained financially?

Technically, you have gained financially - you were given something worth £49,00 and it is now worth around £67,500, so you've made a gain of around £18,500. 

saajan_12

Snowyhull said:

Newbie here!

just wondering if anyone can help/advise please...

Back in 2012 my parent took (which now seems to be bad advice) to add myself to the house deeds as the best way to stop there home being used if they needed care. 

I bought my own home in 2013 and obviously moved out of my patents home.

My parents and myself would now like me to be removed from the deeds. we have had some advise that states i will be liable to pay capital gains tax on the increased value of the property.

in 2012 the property was valued approx. £98,000 and now the home is valued apox £135,000.

Is this true as i have not gained financially?

Yours hopefully 

You have gained a share of 37k, and you could sell back that share. If you choose to give away that money by not charging your parents to buy the property back, then that's up to you but doesn't change the tax position. 

Assuming you had a 1/3 share, then you've gained £12.3k. say 1 year and you get the last 9 months off, so 1y9mth / 13y = 13.4% which is exempt from tax. 

For the time you didn't live there, you gained 86.6% x £12.3k = £10.67k which is taxable. 

user1977

Where are you getting the advice from if you don't trust it? For CGT purposes a transfer between connected parties is deemed to be at market value - so you're assumed to have gained even if your parents aren't paying you anything. 

DE_612183

why do you now want to be removed from the deeds?

Bookworm105

Snowyhull said:

Is this true as i have not gained financially?

yes it is true
As far as tax law is concerned you own a property which is not your main home and it has increased in value.
It is therefore subject to CGT

If you dispose of it (cease to be an owner) then tax law says that you and your parents are connected persons and therefore to address the potential for manipulating payments, the CGT is not based on money changing hands, rather it is based on the market value at the point you cease to be an owner. 

Your gain therefore will be market value at the date you hand your share back to your parents less market value at date it was gifted to you by parents. That will give a gross gain amount which obviously is then multiplied by your share (1/3 ???) to give your individual gross gain . From that latter figure you can deduct your CGT allowance of £3,000 leaving you with a net taxable gain figure upon which you will have to physically pay tax at 18% and /or 24% depending on your overall personal tax position. 

Please note carefully - you have  60 DAYS from the date you cease to be an owner ("completion date" of the transfer) to submit a tax return to HMRC and pay the tax owed to them.

a classic example of the dangers of trying to do DIY tax planning. Well done parents. great way to waste money.

Capital Gains Tax: what you pay it on, rates and allowances: Overview - GOV.UK