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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My business partner and I own two properties (tenants in common)

Customer Question

My business partner and I own two properties (tenants in common) which we rent out. We are wanting to 'split' the properties between us so that each owns 100% of one property instead of 50% of two.
We submit tax returns as a partnership for the two properties. There are no other partnership assets.
If no money changes hands -i.e the values are the same and ownership simply transfers on paper - are there any tax implications which may require payment at the time of the transaction?
Similarly would the position be any different if the property values are different and one party receives a cash adjustment?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. You can effectively defer any liability to Capital Gains Tax by swapping your respective interests in two properties so that you each own only one by making a claim under Sections 248S to 248E Taxation of Chargeable Gains Act 1992. You can read about that starting here: http://www.hmrc.gov.uk/manuals/cgmanual/cg73000.htm This works well if the properties are of equal value but if a payment was made to equalise the values, then there may be a CGT liability and possibly a stamp duty liability. Take a look here for more information and an example: https://www.taxinsider.co.uk/702-Swap_Shop_Exchanging_Interests_in_Land.html http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/manuals/cg4manual/cg73021.htm I hope this helps but let me know if you have any further questions.

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