Capital Gains??

StartingAgainKayla70

Thank you all for taking time out to reply to my post.

Still confused, god wish it was straight forward.

Thanks again x

Pal

Did your mother live in that house and where does she live now?

Remember that if she ever goes into a home, the council may assume that she gave the house away to avoid paying home fees and make her pay full fees.

StartingAgainKayla70

Hi

Yeah, my mum did live in that house, now she lives in another house with her hubby. They have a mortgage on the house they live in. But the house she gave to me and my brother (changed the deeds into our name) has no mortgage on it and we have had it for about two years now.

I am so naive on this subject I thought my brother would just beable to get a mortgage for 55k and transfer it into my bank - end of (how dumb is that) oh and just change the deeds into his name, making him the sole owner of the property.

Ian_W

Michaela,
It obviously isn't as simple as you thought, but it also isn't as scary as it perhaps now seems. These figure are VERY, VERY ROUGH estimates just to show you probably won't be liable for as much tax as you now think.

Your bro is paying you £55k for half so I assume the property is valued at £110k - the selling value and the valuation when you bought it must be realistic otherwise IR may query them.

Assuming value now £110k, using House Price Index on Nationwide BS website the rough value when the house was given to you would have been about £86,800. That gives a total gain of £23,200 but by selling half your gain is only half of that = £11,600. From that you can deduct half the buying and selling costs & any allowable capital improvements [not running costs], if the property was let you will have allowances for that, but for 2 years ownership there is no taper relief.

Don't know any of those so working on the full gain of £11,600 you can deduct your full personal annual allowance [assuming no other capital gains in the tax year] of £8,500, leaving tax to be paid on £3,100.

At the basic rate of tax you would pay £682 or at the higher rate £1240. If the gain takes you from basic to higher rate you'd pay somewhere between the two.

Assuming you are selling now you would have to declare the gain after the end of this tax year April 2006, if you don't fill in a Self - !!!!!! you would need to for this.

Best bet is to get all the figure together and go and see an accountant, they should be able to get the tax down further and for something as simple as this should not charge too much. Hope that helps.

StartingAgainKayla70

THANK YOUTHANK YOU