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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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In 1999 I was left a property worth £52000 which was let

Resolved Question:

Hi
In 1999 I was left a property worth £52000 which was let out, of which 2x 20% was held in trust for my children. In 2001 there were improvements of £15000 made to the property. In 2006 I transferred 30% of my share to my husband, the property was worth around £120000. In 2014 we sold the property for £170000, we know there is CGT to pay but are unsure of how to work it out.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site.

Thank you for requesting that I help you with your question.

Please leave it with me to perform some calculations and I will revert to you later this evening.

I hope this is acceptable.

Many thanks
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your patience

You said the property was valued at £120,000 when you transferred your 30% share in the property to your husband. This valuation has no bearing on capital gains tax calculation as actual values are used when calculating the gain on sale of property.

Here are my calculations

Sale of property

£170,000

Cost price

£52,000

Capital improvements

£15,000

Agents fees, solicitors fee and other costs - say

£0

Total cost price

£67,000

Gain on sale

£103,000

Gain chargable to CGT

£103,000

Share of gain - husband - 60%

£61,800

Gains allowance

£11,000

Gain subject to CGT

£50,800

CGT at 18%, 28% or a combination of both

Maximum CGT at 28%

£14,224

Share of gain - children (held in trust) - 40%

£41,200

Gains allowance - trust

£5,500

Gain subject to CGT

£35,700

CGT at 28%

£9,996

Maximum CGT payable

£24,220

More information on Trust and capital gains tax can be found here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323723/hs294.pdf

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
If I understand correctly when I transferred 30% in the property to my husband ( I still have a 30% share in the property ) this has no effect on the CGT he still has to pay 30% of the gain from the date I first acquired the property in 1999 even though he did not own his share until 2006? Is this correct.
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.

Transfers between spouses are tax neutral i.e. transfers do not give rise to either a gain or a loss. He would pay CGT based on teh facts that he had ownership in the property at teh time of sale.

My understanding from your posting was that you transferred your share to your husband leaving your husband and the trust being stakeholders post 2006.
If you are saying that there are 3 stakeholders at the time of sale, then as far as you and your husband goes you will be entitled to two lots of gains allowance and your CGT would be based on a gain of £39,800.

I hope this is helpful

Share of gain - husband and wife - 60%

£61,800

Gains allowance 11,000 x 2

£22,000

Gain subject to CGT

£39,800

Gain per owner £39,800/2 = £19,900


CGT at 18%, 28% or a combination of both

Maximum CGT at 28%

£11,144

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4940
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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