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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife, my daughter and me have joint tenancy ownership for

Customer Question

My wife, my daughter and me have joint tenancy ownership for the flat in the UK. For my daughter this is a second home and for my wife and me it is main residence. We would like to make my 22 years old son as one more owner of the flat by transferring to him (not for money) part of registered title of this property from each of us. The property was valued at £ 200k when we purchased it and now it is worth about £ 800k with no outstanding mortgage.
Who of us be liable to pay any taxes on this?
Is it possible to hold over the gain until the property will be sold in the future?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you are joint tenants as opposed to tenants in common, you can only act in tandem. Take a look here for more information. If you gift your son part of your home away to your son, it will probably be classed as a gift with reservation of benefit which you can read about here and here unless he lives with you. If it is a gift with reservation of benefit, then the gift will stay in your estates until seven years after you either move out or start paying rent. There will be no Capital Gains Tax for you assuming you have lived in the property since you bought it as it will have been your main residence and, therefore, exempt. If your daughter gifts part of her share to her brother, she may have to pay CGT as she will be treated as making a disposal at the open market value. There is no provision for holding over the gain I'm afraid. The first £11,100 of your daughter's gain will be exempt from CGT and the balance of any gain will be taxed at 18%, 28% or a combination of the two rates depending on the level of her income in the tax year of disposal. I hope this helps but let me know if you have any further questions.
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Customer: replied 1 year ago.
Thank you Tony .
But, If we change ownership from joint tenants to tenants in common with following shares: father- 50% , mother 45% and daughter -5%. Would any one of us be liable to pay any taxes?
Expert:  TonyTax replied 1 year ago.
The type of tenancy is not relevant to CGT. If your daughter disposes of any of her share, it will be a disposal for CGT purposes and, as the property is not her main home, she may have a CGT liability.