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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25439
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I part own two adjoining properties if I transfer my ownership

Resolved Question:

I part own two adjoining properties if I transfer my ownership of one of the properties to my portion of the other property will I be liable for capital gains tax?
Submitted: 3 years ago.
Category: Property Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

from what you say, do I understand that you are the sole owner of both adjoining properties? if this is correct, could you clarify a little more what you mean by transferring your ownership of one of the properties to your portion of the other please?

Customer: No I own half of one property & one third of the other
Joshua :

thank you. could you give me a little more information about exactly what it is you are proposing to do? Are you proposing to buy a larger share from another party in one of the properties for cash or by way of some form of swap?

Customer: I want to enlarge my share of one property by giving up my share of the other property. No money will change hands & all other co owners are family members. I want to end up only part owing one propert rather than two
Joshua :

thank you. So you would propose to effectively offer your share of one of the properties to a third party in return for that third-party transferring some or all of their share in the other property to you. Is that the arrangement?

Customer: No I want to enlarge one property to make a larger family home, the best way to do this is to take my share of one property and trasnfer that part of the building and garden front & rear to myself leaving my mother sole owner of the other property
Joshua :

Thanks. Finally do you live in the property you are wishing to give up your share in or the one you are wishing to increase our share in as your main home? Does your mother live in the other?

Customer: I live in the one I am wishing to enlarge & my mother lives in the other one
Joshua :

Thanks. This is treated as a disposal and acquisition for CGT purposes. You are acquiring your mothers share in your property and she is acquiring your share in her property. Because you are each treated as selling your respective shares in each others property for the value of the share you acquire in the others, there may be CGT payable depending upon the amount you paid for respective shares and the value of the share you are respectively giving up.

Customer: Thanks
Joshua :

If there has been a gain, you may be able to reduce or avoid that gain by making an "election" of your principle private residence relief in respect of each others properties temporarily. This could potentially reduce the gain for the last three years of ownership.

Joshua :

From there you can of course also apply your respective allowances of £10,900 to any gain and any costs associated with acquisition and disposition. In addition if you have made any improvements to your respective properties this can also be deducted from the gain.

Joshua :

Depending upon the figures in question, the above techniques may be able to significantly reduce any gain or avoid paying tax altogether.

Joshua :

An accountant can prepare a CGT computation for you for a relatively modest fee.

Joshua :

Is there anything above I can clarify for you any further?

Customer: Thank you for this advice.
Joshua :

A pleasure. If I can assist any further as the situation develops please do no hesitate to let me know.

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

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