How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

Myself and two other siblings jointly purchased our parental

Customer Question

Myself and two other siblings jointly purchased our parental home over a number of years - with a 25% ownership each including my Mum. My brother and my Mum were formally on the mortgage deeds. Since my Mum died last year, my brother paid me the quarter value share. Finding it very difficult to understand my Capital Gains position. I am a UK tax payer.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you explain exactly how you bought a share of the property over a number of years. How did that work? Who were you buying it from?
Customer: replied 1 year ago.
A mortgage was taken out by my brother and mother. The total cost was divided by 4 and my sister and myself paid a standing order a quarter cost of the monthly mortgage payment into my brothers bank account. The mortgage payment was debited from his account every month. The mortgage was fully paid about 18 months ago.
Customer: replied 1 year ago.
My brother has retained a record of our standing order payments from our respective banks.
Expert:  TonyTax replied 1 year ago.
Thanks. Leave this with me while I draft my answer. It will take a while so please bear with me.
Customer: replied 1 year ago.
OK thanks. My brother has since paid me a cash payment of the 1/4 value of the house shortly after the death of my Mum. It is not clear if I should declare this a a capital gain or if my taxation liability is some other form. As part of probate my brother detailed the arrangement and notified HMRC of our position. He never received any comment either way.
Expert:  TonyTax replied 1 year ago.
When the mortgage was taken out to buy the home, who was it bought from?
Customer: replied 1 year ago.
It was a right to buy purchase from the local council.
Customer: replied 1 year ago.
I think 1990 but I will check
Customer: replied 1 year ago.
Jan 1987
Expert:  TonyTax replied 1 year ago.
Thanks. That's what I thought.
You effectively bought a 25% share when it was bought from the council. That share cost 25% of the purchase price.
You received one quarter of the value of the house when your mother died. So, your gain is your share of that value less the cost of your share as described in the previous paragraph. The first £11,000 of your gain will be tax free assuming you were paid your share in the 2014/15 tax year. Take a look here for information on CGT:
https://www.gov.uk/tax-sell-property/what-you-pay-it-on
What happened to your mother's share of the property?
Customer: replied 1 year ago.
She left a quarter share to her 4 children - the three mortgage contributors and my sister who opted out of the joint purchasing decision for the mortgage.
Customer: replied 1 year ago.
That is 1/16 to each child
Expert:  TonyTax replied 1 year ago.
The "cost" for CGT purposes of the 1/16th share you acquired on your mother's passing will be it's value when she died, ie 1/16 of the value of the property.
Customer: replied 1 year ago.
My mother died in December 14. My brother paid my 1/4 share in May 15. Should my gain be declared for the current taxable year (online submission at the end of this month) or is the gain viewed as payable for the next tax year?
Expert:  TonyTax replied 1 year ago.
Was the property sold or did your brother buy you out?
Customer: replied 1 year ago.
My brother has not sold the property
Customer: replied 1 year ago.
He bought me out of my share
Expert:  TonyTax replied 1 year ago.
So, as your brother bought you out in May 2015, your disposal occurred in 2015/16 so you don't need to report it until you complete a tax return for the 2015/16 tax year which isn't finished yet?
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
OK thank you. Your advice has been very helpful - whilst no one wants to pay tax I definitely would not want to be in breach of any due payments with HMRC. I was rather worried that our informal arrangement from 1987 might have left severely exposed during the coming tax year. Thanks again .
Expert:  TonyTax replied 1 year ago.
It shouldn't do. It's clear what the intention was from the outset as you contributed to the mortgage payments. Take a look here to see if you qualify for any relief from CGT:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief