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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33955
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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in 1990 my wife and myself loaned my in laws £28k to purchase

Resolved Question:

in 1990 my wife and myself loaned my in laws £28k to purchase their property to protect all parties a trust deed was drawn up my father in law has since passed whilst my mother in law has lived in the property until a year ago, she is now in care the property is willed to my wife and myself, my concern is that whilst we have never received any monies are we liable to capital gains tax and on what figure, and what can we do to minimise this. conversations with my previous solicitor never yield a straight answer however he states that my interests would be better protected if ownership was transferred to us. another point made was with reference to gift with reservation
Submitted: 2 years ago.
Category: Law
Expert:  Clare replied 2 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
What are the terms of the Trust Deed?
Clare
Customer: replied 2 years ago.

the beneficiaries hereby covenant with the trustees that any transfer pursuant to the provision of clause 1 of this deed shal contain the following clause


the transferees hereby declare that they or the survivor of them or their successors in title or personal representativeswill not make any transfer of their respective interests in the said property during the lifetime of thr transferrors 0r the survivor of them without the prior written consent of the transferrors


the beneficiaries hereby declare that the income from the property and the proceeds of the sale therefore shallbe held in trust for them as tenants in common in equal share and that all expenditure incurred in respect of the said property shall be borne by them in equal shares

Expert:  Clare replied 2 years ago.
Hi
So it states that whilst your in laws own the property they are holding it on Trust for you is that correct?
Clare
Customer: replied 2 years ago.

I assume so

Expert:  Clare replied 2 years ago.
Hi
What was the original Purchase Price?
Clare
Customer: replied 2 years ago.

£28,000

Expert:  Clare replied 2 years ago.
Hi
Just to check- was this a Council House purchase - if so what was the discount worth?
Clare
Customer: replied 2 years ago.

it was a council house discounted I have ni idea of the discount

Expert:  Clare replied 2 years ago.
Hi
It is essential to fine this out - the solicitor should know
Clare
Customer: replied 2 years ago.

that is not possible. how does this relate to my origin question whether we are liable for capital gains tax when the property passes to us whilst you are in the knowledge of the content of the trust deed

Expert:  Clare replied 2 years ago.
Hi
Because how much the discount was effects both the CGT and the issue of any risk of Care Home fees.
Given the existence of the Trust Deed you have owned the Beneficial rights to the property (the right to receive the proceeds of sale) from the time list was purchased - and at this stage it would indeed be a good idea to change the Legal Title to reflect that
When you sell the property you will indeed be liable for Capital Gains Tax in respect of the increase in value - details here
http://www.hmrc.gov.uk/rates/cgt.htm
The potential issue is that the fact that your in laws contributed the Discount could mean that they retained an interest in a share of the profits - which would be helpful in terms of the CGT but not in respect of the Care Home fees
Please ask if you need further details
Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33955
Experience: I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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