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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4338
Experience:  FCCA FCMA CGMA ACIS
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My husband and I bought a house for our daughter and son in

Resolved Question:

My husband and I bought a house for our daughter and son in law to live in, and I own the property outright. We now are in the process of selling it and using the proceeds to buy another property in our daughter and son in laws name. Would we have to pay capital gains on the sale of the first house, as it is for our daughter?
Submitted: 1 month ago.
Category: Tax
Expert:  bigduckontax replied 1 month ago.

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

Do you own the house in which you and your husband reside or do you rent?

Customer: replied 1 month ago.
We own our house, and the house that my daughter lives in currently. By default on the solicitors side, the house my daughter lives in was only registered in my name when we purschased it.
Expert:  bigduckontax replied 1 month ago.

I am sorry to have to tell you that you will have to pay Capital Gains Tax (CGT) on the gain made on house you are selling. You have an Annual Exempt Amount (AEA) of 11.3K to offset this gain. It will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of disposal.

I am so sorry to have to rain on your parade. Had you originally put it in their names then this taxation would have been avoided. You could have protected your position by putting a charge of the premises.

Customer: replied 1 month ago.
We realise that now, And will learn for our other daughter! My husband seems to think there might be something about being in assumed trust, as she is our daughter, that doesn’t make us liable?
Expert:  bigduckontax replied 1 month ago.

No, but it would have made the trust liable, the AEA would be reduced so that makes the answer the accounting equivalent of a lemon.

I had, some time ago, a case where parents had bought their son a house to live in at Uni and he stayed there for years thereafter. The eventual tax bill on sale for the parents was 35K, ouch!

With my first wife we both wanted a daughter and got one first time so stuck at one offspring. She now is a Doctor of Engineering and works for the New Zealand Government. Both my ex and I wonder how we ever produced such a prodigy.

Customer: replied 1 month ago.
Thank you very much for your help.
Expert:  bigduckontax replied 1 month ago.

Delighted to have been of assistance.

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Expert:  bigduckontax replied 1 month ago.

Thank you for your support.