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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My sister and I both own separate property. We jointly own

a property which our mother... Show More
a property which our mother lives in. We want to buy a smaller house for her to live in. How can we avoid CGT so we can spend the maximum on downsizing for her?
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Hello and welcome to the site. Thank you for your question.

The property your mother lives in is a second home/investment property as far as you and sister is concerned. You can't avoid CGT on it, I'm afraid.

You should both get a gains annual exemption (£11,000 for tax year 2014-15) against the chargeable gain and the balance would be taxed at 18%, 28% or a combination of both depending on your total income.

I am sorry the news is not favourable.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.


Customer reply replied 4 years ago.

Thank you. What is chargeable gain. Would that be the difference between the original price and the price now less £22,000 between the two of us?

Francesca, thank you for your prompt reply.

Chargeable gain is
Sales proceeds minus (original purchase price plus costs associated with buying and selling the property, to include stamp duty and survey fee etc, solicitors charges, agents fee for selling)

From chargeable gain you take your allowance and the balance is chargeable to CGT.

I hope this is helpful and answers your question.
Customer reply replied 4 years ago.

This will reduce the amount we can spend on the downsized property. It is for an elderly relative. Is there anything we can claim against?

Francesca, thank you for your reply.

I can assure you if there are any allowances and reliefs available, I would have highlighted them to you.

The relief for property bought for elderly relative was withdrawn from 6 Apr 1988.

I hope this is helpful and answers your question.
I thank you for accepting my answer.

Best wishes.