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Sam
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I own a property on trust as tenants in common with my son.

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I own a property on trust as tenants in common with my son. The deed says that is held on that basis for my sole benefit and upon any sale of the property, the net proceeds shall be payable to me. The deed also makes me responsible for all outgoings includiung the mortgage. We only executed this deed so that I could get a mortgage (Iam 73). I now wish to sell and downsize. What if any CGT is payable and by whom?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts.

AS its held as tenants in common at least 1% of the property legally has to be owned by you son - (but the other 99% as yours) because the actual existence of a tenants in common arrangement has to recognise that your son is on the property deeds (even though this was just so you could obtain a mortgage)
This is also assuming you have made good all the mortgage payments and the upkeep of the property costs.

So, assuming this has been your home throughout the period of ownership, its disposal will give no capitation gain position for you, as your share of the profit is fully covered by the private residence relief, but your son may have a tiny gain to consider, which I would suspect will be covered fully by his annual exemption allowance (which is £10,900 for this tax year, and increases to £11,100 from 06/04/2014)

If you could give an approx. value of the profit (so sale price you think you will make, and the purchase price) I can then advise further of what figure of gain there might be to consider for your son (and clarify if there is nothing for him to declare to HMRC)

Thanks

Sam
Customer: replied 2 years ago.

I purchased for £260,000 in August 2011 and my property is under offer for £359,950 and I will be paying off the mortgage upon sale. All payments are up to date and no arrears have accrued.

Expert:  Sam replied 2 years ago.
Hi Janet

Thanks for your response

Then we have an initial gain on the value of £99,950 of which 1% has to be treated as your sons - which amounts to £9995, (and this does not take into account 1% of the purchase costs such as legal fees, stamp duty, or the selling fees, such as legal and estate agents or the cost of any capital improvements)
As this is below the annual exemption allowance of £10,900 (and also will remain under the 2014/2015 allowance of £11,100 then there is no capital gains tax arising nor any need to report this to HMRC.

Thanks

Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13694
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and 2 other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Just one point, I think 1% of £99,950 is £999.50 not £9,950! (I suspect a typographical error) but am very happy with the CGT I nfo you gave me.

Expert:  Sam replied 2 years ago.
Hi Janet

You are absolutely right - (I think I may even have got a little trigger happy with the calculator! for which I do apologise)

But as you can see, still no tax liability for your son.

Thanks

Sam

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