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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4419
Experience:  FCCA FCMA CGMA ACIS
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I am in the process of filing my CGT Self Assesment Return

Customer Question

I am in the process of filing my CGT Self Assesment Return for 2015-16 and am in a dilemma as to how best calculate a recentProperty Sale
In 1989 I was unable to get work in the UK so took up a job in the Netherlands.
After a period of 5/6 months my wife joined me and we took the decision to put our children in Boarding School. We also made the decision to let our House in Weybridge.
My wife wanted somewhere to be with the children in school holidays and as we had some cash we decided to buy a House in Poole for £165,000 which we used on and off.
At the end of 1991 my job finished in the Netherlands so we returned to the UK. As our main house was still let we decided to use our Poole House as our main Residence for the next six months.
During this Period Tax Returns were made in both The Netherlands (on my income) and in the UK for the Property Rentals ( we also had another Appartment which we were letting).
This Poole Property was in joint names and was continued to be let with the Income/Expenses being shared betwen my wife and myself.
18 month agao we decided, inconjunction with our son and daughter to invest in a Holiday Home in Wollacombe. There was only one issue and that was that we required a some additional Finance. we investigated the Market and decided to take out a Mortgage on the Poole Property. I was too old - however my wife, at the age of 70 was able to secure a 35 year BTL Mortgage on our Poole House, which she did in conjunction with our Son.
We (my wife and myself) therefore made an election in March, confirmed to the HMRC to change the Ownership (and income) from 50/50 to 94/6 and my wife and son then started to apply for a Mortgage. The House was valued at £400000 and 12.5% was sold to our son for £50000 in May 2015 - ie my 6% and my wifes 6.5%
MY QUESTION therefore is how do my wife and myself account for the 2015/6 Capital Gains made. I am assuming,maybe incorrectly that there would not be any CGT charge at this point in time for my transfer of 44% to my wife.
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 tobe able to help you with your question.

For the period you were working overseas Private Residence Relief (PRR) is extended. However, when you bought your Poole House did you elect with the Inland Revenue as it was then within two years of purchase to which residence you wished PRR to be applied?

Customer: replied 1 year ago.
HiKeith
The answer to that was no because we were then letting our MainResidence. Unfortunately we didn't know that we had to elect it. We were also working and paying tax in the netherlands.
Expert:  bigduckontax replied 1 year ago.

HMRC will then make the decision as to where PRR will be utilised from the facts. I suspect that this will be the Poole address from the time you acquired it.

I am sorry to be so obtuse but which house was actually disposed of to the three of you. Your question is unclear on this point.

Expert:  bigduckontax replied 1 year ago.

Regrettably I cannot undertake a phone call as I responding to your question from another time zone six hours ahead of BST.

Do you wish me to opt out of this thread?

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Apologies for the lack of clarity:
Main House purchased in Weybridge owned by my wife and myself purchased in 1978 sold in 1998. Rented for two year period during 1989/1990
Poole House purchased whilst living in the Netherlands in 1989 and used as UK Holiday Home until 1990, when it was used as main Residence whilst Weybridge Home was let. Following return to Weybridge House, Poole House has been rented out.
In 2014/15 the declared ownership was changed from 50/50 between my wife and myself to 94/6%
in May 2015 12.5 % of the House was sold to my son for £40000. This was my 6% and my wifes 6.5%. The Poole House is now owned by my wife and son.
Hi Keith I may have some of the dates wrong but I hope the concept is clear
Colin
Customer: replied 1 year ago.
Hi Keith
Understand difficulty of phone contact. On reading my last reply I note that I didn't make it clear that during the period 1989/91, my Weybridge House (my main UK residence) was let for two years. During that period I used my Poole House (for 18 months) whilst living in the Netherlands and as my sole UK residence for 6 months after I had returned to the UK.
Hope this clarifies the situation
Customer: replied 1 year ago.
Hi Keith
Don't bother to call. I will try someone else. Unfortunately I now also have to go out
Kind REgards
Colin
Expert:  bigduckontax replied 1 year ago.

Your sale to your son does not appear to have been made at current market value. To assess the position I need to know what that was at the time.

Expert:  bigduckontax replied 1 year ago.

I have decided that your problem is too complex for me to address at this stage so I have opted out. I trust one of my colleagues will be able to assist.

You should ask Just Answer Administration to cancel the fee you so kindly sent me.