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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13942
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I inherited a property in 2010 valued at 285k in equal shares

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I inherited a property in 2010 valued at 285k in equal shares with my sibling. I want to buy out his 50% share to become the sole owner of the property and we have agreed a price of 100,000. Does this leave me open to CGT as I have effectively underpaid?
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on just Answer. Your sibling will have capital gains at the half share increase in value as he is the one making the disposal.Tax reliefs may be available if this has been your siblings main residence since ownership commenced and of course the first £11,100 (which is the annual exemption allowance) is tax free. Any remaining gain will be liable at 18% or 28% or a mix of both (depending on what unused basic rate band there is available) Let me know if you require any further assistanceThanks Sam
Customer: replied 1 year ago.
My sibling is in the Channel Islands (no CGT) I am concerned with my own liability. The property has been my sole residence since 2012 - do I have any exposure to CGT?
Expert:  Sam replied 1 year ago.
Hi Thanks for your response Your sibling will have a UK capital gain liability due to the changes in legislation (since 05/04/2015) but you will only have a liability to consider once you come to sell This is due to the fact that from 2010 to 2012 this was not your mian residence Thanks Sam
Customer: replied 1 year ago.
OK - I think that is good news. Can you clarify a bit, a couple of links that I chase up would be usefull
Expert:  Sam replied 1 year ago.
Hi Thanks for your response Of course First the capital gain position and when it is triggeredhttps://www.gov.uk/capital-gains-tax/overview You see that it arises at the disposal date (which is why this may affect your sibling at this time but not you and it also highlights when a gain may arise and in your case when you do finally dispose of this property - there will always have been a time that this was not your main residence) Then the change of legislation regarding UK property and a non resident owner (in this case part owner) https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property This advises from 05/04/2015 what must now take placeWhereas before any sold property that saw the owner (co - owner) a non resident for at least 5 years (during which a disposal took place) would be treated as exempt from UK capital gains Now any gain that arises from 06/04/2015 to the date of disposal (market value) is considered for UK capital gains Let me know if I can assist further but it would be appreciated if you could rate me for the level of service I have provided (or click accept) Thanks Sam
Customer: replied 1 year ago.
Just to be clear - I am in the UK and the property is my main/sole residence - I'm not sure if I made that clear? Does that change anything?
Expert:  Sam replied 1 year ago.
Hi Thanks for your response Yes you did advise that it was main residence (as from 2012) but you also advised that it had not been your main residence for the period 2010 to 2012 so this has already formed a capital gain position for consideration in the future if and when you dispose of this property Thanks Sam
Customer: replied 1 year ago.
If the house was valued at 285,000 + I am paying him 100,000 then he hasn't made a gain so no CGT should be payable - but how does that affect me as I have effectively recieved a 'gift' ?
Expert:  Sam replied 1 year ago.
Hi The gain is not realised until such time that you dispose of the property - then the value at that time is considered less your half share value at the time of acquisition to the date of the acquisition and also the £100,000 paid for the further half share. Thanks Sam
Customer: replied 1 year ago.
Is there any time limit on that? IE - if I sell in 10 years I will still have CGT to pay?
Expert:  Sam replied 1 year ago.
Hi No - no time limit - there will always be a capital gain consideration, but may not be much of an actual capital gains tax bill to pay, as whilst the property value will increase over time, so will the time it then has been your main residence , and the time from 2010 to 20102 when it was not your main residence will not increase (unless you vacate the property before sale) All these new questions really should be listed as new questions and new amounts offered as per Just Answer policy - as your original question has been fully answered, and whilst I have been more than happy to assist further - as it would appear to be your first time on Just Answer, any additional questions will require you to either list this a new question OR I can offer additional question and answer time (but again a further charge will arise) Thanks Sam
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Customer: replied 1 year ago.
OK - point taken on the extra questions - thanks again :)