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Capital gains tax

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Ed-1
Ed-1 Posts: 3,892 Forumite
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in House buying, renting & selling
Is capital gains tax due when you sell a share of your property (e.g. currently own 100% but sell half of it)?

If you sell it to a family member, the market value applies instead of the consideration exchanged - is this the market value of the share (50%) compared to what the market value of that 50% was worth when the property was originally bought?

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  • silvercar
    silvercar Posts: 46,968 Ambassador
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    Any transaction between family members is deemed to be at market value, for the purposes of tax calculations.

    Do make sure you are obtaining the correct market value eg the market value of a property with vacant possession is a lot higher than the market value of a property where someone has the right to live and not pay rent.
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  • Ed-1
    Ed-1 Posts: 3,892 Forumite
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    silvercar wrote: »
    Any transaction between family members is deemed to be at market value, for the purposes of tax calculations.

    Do make sure you are obtaining the correct market value eg the market value of a property with vacant possession is a lot higher than the market value of a property where someone has the right to live and not pay rent.

    What if the subject of the transaction is only a share of a property though and not the entire property - is the market value that of the entire property or X% of the market value of the property?
  • kinger101
    kinger101 Posts: 6,284 Forumite
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    edited 6 August 2018 at 10:43PM
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    Ed-1 wrote: »
    What if the subject of the transaction is only a share of a property though and not the entire property - is the market value that of the entire property or X% of the market value of the property?

    It's X% of the open-market value of the property. But you base cost isn't X% of the acquisition value. It's cost x disposal proceeds / (disposal proceeds + value of the remainder).

    A 50% share in something isn't necessary worth half an assets entire value.

    For clarity, family members (or connected persons) includes spouse, ancestor, sibling or linear descendant, but not nephews, aunts, cousins etc.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    ISTR someone posting a reference to an HMRC document which implied that a share of a property was worth maybe 15% less than its pro-rated value, simply because it was a share.
    Eg house is £200k, you sell half, which nominally is worth £100k but should really be £85k.
    Best to find that document if you wish to do this.
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