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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My husband and I bought a second property in October 2015 as

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My husband and I bought a second property in October 2015 as an investment. My mother has recently sold her property and would like to buy a 1/3 share in the 2nd property my husband and I own, and live in it. We're happy for that to happen, but would my mum need to pay any stamp duty? Would either side be liable to pay any tax?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question.SDLTIt all depends on what 1/3 share of the property is valued at. More information on SDLT rates on freehold sales and transfers can be found herehttps://www.gov.uk/stamp-duty-land-tax/residential-property-rates Capital gains taxAs you are selling 1/3 share of your property and this property is a second home, gain you make on sale of your 1/3 share would be chargeable to capital gains tax.You would take off the gains annual allowance of £11,100 per owner (in your case £22,200) from the gain and the balance would be subject to CGT at 18%, 28% or a combination of both depending on your total taxable income including the gain in the year of sale.Lets say you bought the property for £210,000 and its present value is £255,000. You are selling 1/3 share .. the gain on this sale is (255,000-210,000)/3 = 45,000/3 = £15,000.You are allowed a gain of £22,200 in total before you would be taxed. In this example there is no CGT payable.In the example shown there will be no SDLT payable as the consideration is below £125,000. I hope this is helpful and answers your question.If you have any other questions,please ask me before you rate my service – I’ll be happy to respond.and
Customer: replied 1 year ago.
We bought the property for £520000 in Oct 2015. I would say that the value is probably the same. At most it will have gone up by £10,000. My mother is proposing to give us £173,333 for a thirs share of the property. If I'm interpreting your message correctly, we wouldn't pay any CGT on the money we receive from my mother. Can you please confirm? Can you also please confirm if my mother would be liable to pay any stamp duty. Thanks.
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your prompt reply.If the current valuation is similar to what you paid for it in Oct 2015, then there is no gain on sale and therfor no capital gains tax payable.A consideration of £173,333 would attract SDLT of (173,333-125,000) 48,333 @ 2% £966.66 ..just under £1,000. I hope this is helpful and answers your question.
Customer: replied 1 year ago.
Thanks. If my mother needed to go into a care home, would we need to sell the property to pay care home fees?
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply..This is not related to your original question and under Just Answer rules you should be putting a new question..On this occasion I would provide you an explanation.It depends on what capital she has as it is means tested.You may find information from Age UK here helpful.http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/ I hope this is helpful.I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.
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