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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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I live in a house rent free which my son owns but has mortgage

Customer Question

I live in a house rent free which my son owns but has mortgage on. I am moving out and he will sell house what are his tax implications.!!
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question. The glib answer is as long as the proverbial piece of string, but I will elaborate for you once you have told me if he resides in the house too and if he has landed property elsewhere.
Customer: replied 2 years ago.

no this is my house and he has other property near by. Have lived here for 5 years when first bought for me.

Value of house £165.bought for £125 and £91 mortgage on it.

Customer: replied 2 years ago.

Not sure if my answer was sent

I have live in the house which was bought 5 years ago when I came back from Spain. He lives in another property near by.

House value £165 bought £125 mortgage £91

Expert:  bigduckontax replied 2 years ago.
Sorry to be so pedantic, but this is important. In your initial question you say your son owns the house you currently occupy then in response to my follow up you say 'this is my house.' Please clarify for me who actually owns this residence.
Customer: replied 2 years ago.

he owns house i pay all expenses and upgrades spent about £40.000 on it

Expert:  bigduckontax replied 2 years ago.
He will be liable to Capital Gains Tax (CGT) on any gain made on disposal. Unfortunately I cannot calculate this at this stage as you say 'House value £165 bought £125 mortgage £91.' What did he pay for the house when he bought it?
Customer: replied 2 years ago.

he took a £91 mortgage I gave him rest as deposit.

Expert:  bigduckontax replied 2 years ago.
On the assumption that he sells at 165K and bought at 125K then his gain is 40K However, the upgrades must be added to the purchase price and you say these amount to 40K so there is no gain left to tax; tax payable, nil.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.