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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I transferred the deeds of a property into my sisters name

Customer Question

I transferred the deeds of a property into my sisters name and someone has mentioned that I may have to pay tax on it. I made no profit from this transaction and am confused. If tax is payable then I need to know how much it would be, can you please help?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. Can you tell me about the property please. Is it a residential property? Was it ever your main home and/or let? If it was ever your main home, how long did you live in it for? What did it cost to buy, when exactly did you buy it and what was it worth when you gave it away to your sister? When did the gift occur?
Customer: replied 11 months ago.
Yes it is a residential property. Yes it was my main home that shared with my sister but only for a short period of a couple of months only and she remained. the purchase price was £95k and the value when given to my sister was around £140 but this after significant refurbishment after I bought it, i spend circa £30k on it. the change in name occurred in June this year.
Customer: replied 11 months ago.
sorry i bought it in November 2010
Expert:  TonyTax replied 11 months ago.
Thanks. Did your sister pay you rent after you moved away from the property?
Customer: replied 11 months ago.
no she did not
Expert:  TonyTax replied 11 months ago.
Thanks. Leave this with me while I draft my answer. It will take a while so please bear with me.
Customer: replied 11 months ago.
ok thanks but could I ask that it is in plain terms with little jargon, the HMRC website confused me greatly thanks
Expert:  TonyTax replied 11 months ago.
If you give away an asset such as a property to a "connected" person such as your sister, you are treated as having sold it at the open market value and you may have to pay CGT. Whether you do have to pay CGT or not depends on the specific facts and figures. If you claimed no reliefs other than the 30K refurbishment costs, you would have a gain of £15,000 (£140,000 - £95,000 - £30,000). The first £11,100 of that would be tax free due to the CGT annual exemption leaving you with a net taxable gain of £3,900. You would pay CGT on that at 18% or 28% or a combination of the two rates depending on the level of your income in the tax year of disposal, 2015/16. So, the CGT could be £702.00 (18%) or £1,092 (28%) or somewhere in between. HMRC may ask to see the receipts and invoices related to the refurbishment costs. If you claimed main residence relief for the couple of months you lived in the property, you would also qualify for relief from CGT for the last 18 months of ownership. That would amount to £5,537 (£15,000 / 56 months x 20 months) and would leave you with a net taxable gain of £0 (£15,000 - £5,537 - 11,100). There would be no CGT to pay. Take a look at HS283 for more information on the main residence and CGT. I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
Thank you for your response :
1. what does this mean? ' If you claimed no reliefs other than the 30K ' I havent 'claimed' anything.
2. What do I do now?
3. I really need to know what I am likely to pay and when?
Expert:  TonyTax replied 11 months ago.
1 Main residence relief. 2 If you don't already submit annual self-assessment tax returns, then you can register to do so by completing a form SA1. 3 The payment date for any CGT will be 31 January 2017. I've told you what it could be. HMRC may disallow any part of the refurbishment costs that you cannot prove, preferably in the form of receipts and invoices, that they may and I stress may ask to see. If they did that, you would have a significant CGT liability. Photographic evidence may help. I cannot predict what HMRC will do, if anything. They may simply accept the figures as you report them and do nothing.
Customer: replied 11 months ago.
can I confirm payment date would be January 2017 and NOT 2016?
Expert:  TonyTax replied 11 months ago.
The disposal occurred in June 2015 which is in the 2015/16 tax year. CGT for 2015/16 is not due to be paid until 31 January 2017. The 2015/16 tax year hasn't ended yet.
Customer: replied 11 months ago.
Ok thank you, ***** ***** question, will this impact my tax liability in subsequent years or just for this year?
Expert:  TonyTax replied 11 months ago.
It will only impact your tax liability for 2015/16.

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