Capital gains tax taper relief

silvercar

You need to do the calculations and compare.

Although your gain is 100k, indexation is applied to the original purchase price not the gain. Indexation only uplifts the value from purchase date (or 1982 if later) to 1998, so if this is small there won't be much to gain.

Would it be better to give half to my husband (standard rate tax payer) and keep half for myself (just into the standard rate), OR give the whole lot to him to lock in the the savings you mentioned above?

Your income tax rates don't matter, after 5 April, CGT has a flat rate of 18%.

Transferring all to him, gives you indexation on the lot, trasferring half gives you indexation on half. If you give the lot then you don't get a second lot of CGT allowance.

I don't see how the inland revenue could object to you transferring half back at a later date, though you would incur solicitors costs again.

First task is to see the exact benefit of indexation. Post the purchase value and the date of purchase.

WallyBird

Thanks again Silvercar.
I am not sure I understand, or that I have the relevant information. The house was bought as a derelict barn in about 1983, by my parents. I don't know what the purchase cost was (£12K?), but I think the total including renovations was about £60K.
At some time after this (1990?), they decided to give shares to their five children. No record of this, so I am not sure what the process was. Maybe the house would have been worth about £150k by then. I am only guessing. At this time I had 1/7 of the house.
In 2002 my brother died and his share was given to the remaining children, so since then I have had 5/28ths. At that time the house was worth maybe £280K.
It has recently been valued at £425K.

I hope this is enough information! Sorry I had to guess.

What I really want to know is whether the CGT amount to be saved by doing the transfer would be worth the cost in solicitors fees.

Presumably if I decided to transfer half, I could do this at any time (if the money saved was going to be so little as not to be worth doing the transfer before April)?

Thanks again.
WallyBird

Anon

Potentially stupid question, but how would you transfer a property to your wife to lock in the Indexation please (and is it still feasible before 6th April)?

Many thanks

Anon

Elaine_Wilson

WallyBird wrote: »

What I really want to know is whether the CGT amount to be saved by doing the transfer would be worth the cost in solicitors fees.

I see you have not had a reply yet so I hope you don't mind me stepping in.

You will really need to find out the actual facts to be sure but these are ball park figures.

Let's assume your 1/7th share was worth £21,500 in 1990. There was quite a bit of inflation in that year so the exact month will make quite a difference.

Working on January the indexation is 0.361 of £21,500 which is £7,761. The tax saving will be 18% of this so, say, £1,400.

Using December we have 0.252 x £21,500 = £5,418. Tax saving £975.

Those figures relate to the whole of your share so they must be halved if you only transfer 50%. I.e. somewhere between, say, £490 and £700.

Presumably if I decided to transfer half, I could do this at any time (if the money saved was going to be so little as not to be worth doing the transfer before April)?

Yes, if you don't go for locking in the indexation it could be done just before the property is actually sold. Just make sure that the paperwork does show that you first transferred half the property and then jointly sold it and not that you sold the property and gave half the proceeds to your husband.

silvercar

I agree with Elaine, transferring before April 5 allows you indexation, making a saving of 975-1400 (whole) or 490-700 (half).

Benefitting by an extra CGT allowance will save you 18% of 9,600 = 1628.

The costs of transferring through a solicitor, should be 200-400.

This suggests that transferring it all now and then transferring half back just before sale would be most beneficial, unless anyone knows why that wouldn't be allowed.

WallyBird

Silvercar and Elaine, Thank you very much for doing these calculations for me! I will try and find out the proper figures, although not sure if they even exist!
WallyBird

Anon

Anon wrote: »

Potentially stupid question, but how would you transfer a property to your wife to lock in the Indexation please (and is it still feasible before 6th April)?

Many thanks

Anon

I said it was a stupid question , but if costs of doing it through a solicitor are £200 to £400, does that mean you could do it yourself with Land Registry and I assume mortgage company.

Many thanks

Anon

silvercar

I doubt a mortgage company would allow you to do it yourself.

Anon

Thank you - is it still feasible by 5th April if involving a solicitor?

Many thanks

Anon

Anon

Forgot to say (and have been busy so simply forgot!) - have deeds in deedstore (but technically still a mortgage - apparently deedstore now redundant as deeds are digitised?) - even closer to the deadline now - is it still possible in the timeframe please?

Many thanks

Anon