How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask TaxRobin Your Own Question

TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 13595
Experience:  International tax
14155347
Type Your Tax Question Here...
TaxRobin is online now

Hi, My wife and I purchased a property for rental in 2004

Resolved Question:

Hi,
My wife and I purchased a property for rental in 2004 when we were married
It is in joint names and 50/50 ownership
We separated in 2008 and it has remained in joint ownership to this day providing rental income.
Purchase Price £485,000
Mortgage £350,000
Stamp Duty £14,550
Cost of purchase £3000
Refurbishment £19,450
Current Value: £1,200,000
Given the following settlement options, what is the impact of both parties of the following:
1. Sale of property and splitting of proceeds 50/50
What is the CGT liability of both parties?
2. One partner buying the the other out of their 50% share and keeping the property as a rental
What is the CGT liability of the partner who is bought out?
What is the CGT liability of the partner who is now owner of the rental property
3. One partner buying the other out of the property and them moving in as their primary residence.
What is the CGT liability of the partner who is bought out?
What is the CGT liability of the partner who will be living in the property.
What is the owners future liability should they choose to sell in 5 or 10 years time?
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
If this property has always been rental then the CGT will apply on the gain (for each) in the sell.
What is the CGT liability of both parties? the same as the split on the income. The split for CGT would be 50/50 as well.
What is the CGT liability of the partner who is now owner of the rental property? None except their basis (cost) now is the amount paid to the other and added to their original cost.
What is the CGT liability of the partner who is bought out? Their share of the cost and difference in the sell. The 50% would still apply to the owner that sold.
What is the CGT liability of the partner who will be living in the property. Residence relief can apply for the time it is their residence and on the gain that happens form the change to sell.
What is the owners future liability should they choose to sell in 5 or 10 years time? Pretty much answered in the question before this one but, they can claim Private Residence Relief on the time they owned and lived there but the gain prior to them using would be subject to CGT.
Customer: replied 2 years ago.

Thanks for the prompt reply. Just one more clarification on calculation of the cost portion.

If one partner is bought out, is the 50% CGT liability worked out with all or 50% of the original cost calculated?

Expert:  TaxRobin replied 2 years ago.

They work work out their CGT based on 50% of the cost when originally purchased. Everything is halved.

TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 13595
Experience: International tax
TaxRobin and other Tax Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions