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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I moved out of a property I owned with my mother in 1999

Resolved Question:

Hi I moved out of a property I owned with my mother in 1999 that I purchased with her and father in 1989. Dad died in 1994 mum died this year. I own 50 pct of the house rest is part of the estate. How can I avoid cut? Can I transfer to my partner for example?
Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: No
Submitted: 3 months ago.
Category: Tax
Expert:  TonyTax replied 3 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Customer: replied 3 months ago.
Ok I meant cap gains tax not cut
Expert:  TonyTax replied 3 months ago.

You won't avoid CGT by transferring the property to your partner as that will be dee,ed to be a disposal for CGT purposes at the open market value. The half you inherit from your mother, if that is the case as opposed to it being sold by the estate, will have a cost for CGT purposes equal to half the property's market value at the time your mother died and that will be added to your share of the purchase price from 1989 to arrive at the actual CGT cost.

Short of moving into the property and living in it for a very long time, assuming that is value has increased substantially since 1989, there is nothing you can do to avoid CGT if you sell it.

Customer: replied 3 months ago.
I lived in the property for many years surely that has a bearing on matters? The house is being sold how do I work out the tax on the 50pct I inherit?
Expert:  TonyTax replied 3 months ago.

Can you tell me which month in 1989 you bought the property and which month in 1999 you moved out please. What was the value of the house when your mother died? What was the purchase price in 1989?

Customer: replied 3 months ago.
I think it was July in both cases. Purchase price was approx 100k sale price approx 300k
Expert:  TonyTax replied 3 months ago.

Thanks.

I'll do some calculations. They will take a while so please bear with me.

Expert:  TonyTax replied 3 months ago.

If you sell the property in October 2017 for £300,000, you will make a gain of £100,000 (£300,000 - £50,000 (50% 1989 purchase price) - £150,000 (50% 2017 probate value)). You can also claim your share of the costs of buying and selling the property against the disposal proceeds (legal fees, stamp duty, survey fees, selling agent fees).

DISPOSAL OCTOBER 2017

Gain: £100,000

Exempt gain: £40,708 (£100,000 / 339 x 138 (120 months of occupation by you + last 18 months of ownership)

Non-exempt gain: £59,292 (£100,000 / 339 x 201 (219 months of non-occupation by you - last 18 months of ownership)

Gross Non-Exempt Gain: £59,292

Annual CGT Exemption: £11,300

Net Taxable Gain: £47,992

CGT is charged at 18% or 28% or a combination of the two rates depending on the level of your income in the tax year of disposal on residential property gains. Take a look here for further information.

I hope this helps but let me know if you have any further questions.

Customer: replied 3 months ago.
Thank you
Expert:  TonyTax replied 3 months ago.

Thanks.

Would you mind rating my answer before you leave the site please.

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