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bigduckontax
bigduckontax, Accountant
Category: Tax
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I purchased a property back in 2002 with an ex business

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Hi,I purchased a property back in 2002 with an ex business partner for £333,000, we both put money into the deal to cover the deposit on the mortgage. I was then advised in 2010 to create a deed of trust to show that i leaglly owned 50 percent of the property, we now wish to go our separate ways and the property is valued at £650,000 and i would like to buy his half share at £325,000.How does he delare the sale on his tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The pair of you bought for 333K and the sale is at 650K. The gain is thus 317K, half each, 158.5K. You do not have to worry about this as it is only your partner who would be liable for Capital Gains Tax (CGT) on his 50% share. He declares this as a capital gain on his Self Assessment Tax Return using a form SA108, but the tax itself is payable on account by him within 30 days of completion. H will be entitled to his Annual Exempt Amount (non cumulative) of 11.1K to offset this gain and he may be entitled to Entrepreneurs' Relief which limits the tax to a flat rate 10%. Otherwise he is taxed at 18% or 28% or a combination of the two rates depending on his income including the gain in the tax year of sale. A worst case scenario is a tax of some 41K plus. I do hope that you have found my reply of assistance.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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