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TonyTax
TonyTax, Tax Consultant
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,My name is***** living in Oxford.

Resolved Question:

Dear Sir or Madam, My name is***** living in Oxford. My brother is not a British citizen. He co-invested to buy a house with me in Oxford. 1/We would like to know that how much tax (Capital gains tax), will he have to pay and will I have to pay if we sell the house? 2/The second question is that we are renting the house, how to calculate the tax duty for my brother each month or each year? 3/My brother’s Bank is ANZ in Singapore, after selling the house, how can we transfer money for him? Many Thanks Kim XXX

Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Have either you or your brother lived in the Oxford property since you bought it? When did you buy the house? How much did you pay for the property? How much is it worth now? Do you and your brother own it in equal shares?
Customer: replied 2 years ago.

Hello,

We are going to buy it for leting. The asking price now is 359.000 and it has been offered for us. My brother will pay 90.000 as deposit and the rest will be paid by my mortgage. We want to know the tax policy for the future when we sell it.

Thanks

Expert:  TonyTax replied 2 years ago.
Thanks, ***** ***** will the ownership be split, 50:50, 75:25 or another ratio?
Customer: replied 2 years ago.

75:25

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer. It will take a while.
Expert:  TonyTax replied 2 years ago.
Hi.

CAPITAL GAINS TAX


As you may know, from 6 April 2015 non-UK residents who make a gain from the disposal of UK residential property will be liable for Capital Gains Tax in the UK. Take a look here for information on that.

The gain from the sale of a property is treated as having accrued evenly over the entire period of ownership. The first £11,100 of gains made in a tax year by any individual are tax free. The balance of the gain will be taxed at 18% or 28% or a combination of the two rates depending on the level of income in the tax year of disposal of the property. Look here for information on how to work out your CGT rate. As your brother is non-UK resident, only his UK income will be used to determine his CGT rate.

If the property is the main residence of the owner or a part owner, then their share of the gain can be exempted under the main residence rules which.

INCOME TAX ON RENTAL INCOME


You will each need to register for self-assessment to disclose the rental income annually after the end of the tax year on 5 April. As your brother is non-UK resident, he will need to register with HMRC under the non-resident landlord scheme which you can read about here.

You will be entitled to a personal allowance as you are UK resident which you may already be using against other sources of UK income. Your non-UK resident brother won't be entitled to a UK personal allowance as you will see here.

Income Tax is charged at 20% on the first £31,785 of taxable income, at 40% on the next £118,215 and at 45% on income in excess of £150,000. Any tax due for 2015/16 will be payable on 31 January 2017. You may have to make payments on account as you can read here.

TRANSFER TO SINGAPORE

The solicitor who handles the legal work when selling the property will arrange a transfer of funds to your brother's bank in Singapore.

I hope this helps but let me know if you have any further questions.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
If I bought a house and I send it within 2 years after purchased, will I need to pay Capital Gains tax? Somebody told me that it is free within two years time, is it correct?
Expert:  TonyTax replied 2 years ago.

You would need to live in it for a period to qualify for the last 18 months of ownership exemption.

Take a look at HS283 for more information.

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