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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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A property was sold to a friend whilst the owner was in

Customer Question

A property was sold to a friend whilst the owner was in prison. The new owner has agreed to sell the property and the proceeds will be returned to the old owner. would the short term owner pay tax on the profit. the property was not the short term owners main residence.
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be bale to help you with your question.

Unfortunately, yes! The gain between the current market value at the time of the gift and the net selling price would create a Capital Gains Tax (CGT) liability. The short term owner does have a non cumulative Annual Exempt Amount (AEA) of 11.1K to offset this gain. Anything over will be taxed at 18% or 28% or a combination of the two rates depending on their income including the gain in the tax year of sale.

One small point though, was this property the only residence the new owner owned?

Customer: replied 10 months ago.
No it was not. I am advised he had other investment homes.
Expert:  bigduckontax replied 10 months ago.

Right, no change to my answer then.

Customer: replied 10 months ago.
Thanks.
Expert:  bigduckontax replied 10 months ago.

Please be so kind as to rate me before you leave the just Answer site.

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