sorry, hope you havent been hanging on....I have vistors, so will come back to this later on
ok. Finally free now.
My questions concern CGT on UK property. I guess these questions come up lots, so I'm sure you can help.
I jointly own 3 properties with my 3 siblings. I know CGT is due only on sale, not transfer. However, we are going to divi up these joint assets as our mother died last year, and the complexities of her estate mean none of us want complexity in the future for our off spring. But none of the properties will be sold yet.
The 3 consist of:-
1 BTL which our mother bought in 2000 for 69k was TR1 transferred to the 4 of us in 2003 (just after our father pass away). None us us have ever lived there. I assume CGT will be due on the eventual difference between the original purchase price of £69k and the eventual sale price, which currently is around 175k?
The 2nd house the 4 of us purchased jointly in 2011 for £184k. This is currently worth around £264k. No brainer, there is a current CGT liability of £80k on this one. Correct?
Of course the 3rd one is the complexity.
My mother bought this one for 95k in 1996. She TR1 transferred this to us in 2008. At time of transfer this was valued at £250k. Mum lived in this primary residence until 2008, when she moved into sheltered accommodation. My sister moved into this house then. Ive no idea when she classed this as her primary home, as she owned a more expensive house for the next 2/3 years in London. This was sold maybe in 210. As Mum died 6 years after this transfer it is part of her probate valuation and subject to IHT. This property is currently worth £350k. (or was at her death) I assume that as this was still part of Mums estate (and subject to IHT) that this original purchase price would be now be the value at time of transfer rather than the original purchase price? i.e. £250k Meaning the CGT would currently be £100k Or do we end up getting taxed twice?!
On the matter of original purchase prices, I guess the revenue have access to these historic prices (if they want to) so there would never be a debate, about values when transferred, as these non financed transfers do not count, unless it was part of probate?
Also, is there anyway of the 4 of us using up any of our annual CGT tax free allowance without selling these properties.
There is no urgency to any of the transfers we are thinking about, so these could be done over several years.
Lots of questions, I'm afraid!!
I look forward to your thoughts.
that's fine. I know there's a clock in the back ground!!
If it make any difference (maybe tax difference) at all the profile of the 4 of us is
two of us are both early retired people in their 50s, who both own other property but are not currently paying 40% tax.
Our 2 younger brothers are both bankers in the city. Both have property portfolios, live in million pound homes etc and pay %50 tax
So to clarify.
property 1- CGT is not calculated from the original purchase price, it is the value at time of transfer to us?
property 2 has a potential 80k gain. if we moved this from joint ownership to individual ownership, would/could CGT be payable then or only in the future ?
The ESC D26 article seams to say we can divi up, without CGT, so long as it is equal. Does this mean that it just delays CGT until a future "sale date", so does this somehow "reset" the purchase price to the value at this transfer date?
however, it also indicates that equalization payments (which I suspect we will do) attracts CGT.
Can you explain how that works? Is that CGT payable "now" when we do this and resets purchase price to current asset value?
one final clarification!!
so - ....When cash is used to equalise transfers, then CGT may be due for the tax year of transfer depending on the facts and figures.
does this indicate that we should look to equalise these 3 properties between the 4 of us over 3 years to get our CGT allowance in for each year?
of course there is one more!
the link you sent to tax insider is great.
This is particual looks to be similar to property 1
should we have paid some CGT when Mum gave us that place, as we didnt??!!