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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have joint ownership with my siblings, and we are about to

Resolved Question:

I have joint ownership with my siblings, and we are about to sell the property, but I would like to buy the property off my siblings, how do I stand with capital gains tax?, are we all liable for capital gains tax, and how much do have to pay in capital gains tax?, bearing in mind, I am also a home owner too.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. Can you tell me how you came to own a property with your siblings please. When did you acquire it? How much did you pay for it? If you inherited it, what was it worth when you inherited it?
Customer: replied 2 years ago.

Our mum gave it to us in 2003, and all our names or on the deeds, I am not sure of the value of property, when it was signed over to us

Expert:  TonyTax replied 2 years ago.
Thanks.

Did your mother continue to live in the property after she gave it to you and your siblings?
Customer: replied 2 years ago.

yes, until she passed away in 2009, at present its been rented out for over a year now, but I would like now to buy out my siblings. I am in the process of having the house valued, in order to pay off my siblings

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer. It will take a while so please bear with me.
Customer: replied 2 years ago.

there are no inheritance tax to pay, all sorted after my mum passed away

Expert:  TonyTax replied 2 years ago.
Hi again.

When your mother gifted her home to you and your siblings, it was a gift, the value of which will have fallen out of her estate for Inheritance Tax purposes had she lived for seven years after making it to you. However, as she continued to live in the property until her death, it was a gift with reservation of benefit (unless she paid a full market rent) and so the value of the house when she died should have been included in her estate for Inheritance Tax purposes.

As far as you and your siblings are concerned, your cost for CGT purposes is the value of the house when it was gifted to you in 2003. You will need to get a valuation of the property at that time from a local agent. Alternatively, look on Rightmove or Primelocation for similar properties in the area that were sold in 2003.

If you buy out your siblings, you will have no CGT to pay as you won't be selling anything. Market value will be used even if you buy at a discount. Each of your siblings will have a gain equal to the difference between their share of the disposal proceeds (or market value if higher) and the value of their respective shares of the property in 2003.

The first £11,100 of gains made by an individual in 2015/16 are tax free. There are two rates of CGT, 18% and 28%. The rate or combination of rates payable is dependent on the level of the individual's income in the tax year that gains are made. Assuming you buy out your siblings in the current tax year, 2015/16, one of the following scenarios will apply to each of them depending on their individual circumstances:

1 If the sum of the income and the net taxable gain is £42,385 or less, then all the net taxable gain will be taxed at 18%.

2 If the income alone is more than £42,385, then all the net taxable gain will be taxed at 28%.

3 If the income alone is less than £42,385, but more than £42,385 when the net taxable gain is included, then part of the net taxable gain will be taxed at 18% and part at 28%.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

if and when I do buy out my siblings, and I am ready to sell in a few years time, will I then be liable for capital gains tax

Expert:  TonyTax replied 2 years ago.

You may have CGT to if you sell the property for a profit in the future. How much will depend on the tax rules in place at the time and whether you occupy it as your main home. Take a look at HS283 for information on the main residence and CGT. As I said, the rules may be different in the future.

Customer: replied 2 years ago.

I am unable to grasp the figures you quoted, but say for example we all end up with the figure that you quoted earlier, does this mean the first 11000.00 is tax free, and the rest will be taxed at 18 or 28, how do I know what bracket my siblings will be in,

Expert:  TonyTax replied 2 years ago.
The first £11,100 of gains an individual makes in the current tax year will be tax free. You will have to ask your siblings what their income levels are. Their taxes are their responsibility, not yours.

Take a look here information on CGT. Section 7 explains how to work out the rate or combination of rates that an individual will pay.
Customer: replied 2 years ago.

if I think of any other questions am I able to come back tomorrow and asked further questions?

Expert:  TonyTax replied 2 years ago.
So long as they are on the same topic, yes you can. You can even ask follow up questions after you have rated an answer.
Customer: replied 2 years ago.

thank you, ***** ***** been a great help, excellent service

Expert:  TonyTax replied 2 years ago.
Thanks.
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