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Sam, Accountant
Category: Tax
Satisfied Customers: 14152
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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England] Property was purchased in 2005 in the names of A,

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[England] Property was purchased in 2005 in the names of A, B & C (all family) jointly on the mortgage and Land Registry; this was A's sole residence and they only paid the deposit, mortgage, council tax and all bills. B & C own and live in another property and were purely involved to 'guarantee' a mortgage for A.
A has just purchased a second property (intending to move asap).
The property owned by A, B & C is to be sold, estimated increase in value is £100,000 (total value of the property is £250,000).
Are B & C liable for capital gains tax? Is there a manner in which any liability can be minimised given they have no 'financial' involvement other than being signatories.
A, B & C are on good terms, B & C agree they have no financial input into the property. B & C are retired, have no major sources of income and no other property transactions.
Hi Thanks for your question I am afraid B and C are liable to capital gains, as being a guarantor does not mean the names need to be present on the land registry - (as this is purely an arrangement between the lender and purchaser to protect the loan/mortgage) And therefore because there names were present on the deeds - this denotes legal ownership and therefore the sale of any property that is NOT the main residence (as in the case of B and C) will give rise to a capital gain. I am sorry there is no way to mitigate this - let me know if you wish any further assistance with this matter Thanks Sam
Customer: replied 2 years ago.
Hi thanks Sam, is there a way to formalise their lower percentage ownership? (and therefore their percentage liability for CGT?)
Hi Thanks for your question Yes - although ideally this would have been recorded from the beginning - but you can go as low as 98% for A and 1% each for B and C - I would suggest you take some legal advise as to how this can be recognised as such from the date of purchase (Which will be based on the fact that no contribution was made by B or C to date) Finally make sure this deed of trust is drawn up as soon as possible and ideally the sale takes place after 05/04/2017 (but I appreciate this may not be likely as it would seem the plan to sell is imminent) It just would create a tax year of separation to bind the share ownership deed up further - and prevent HMRC arguing this was drawn up just to avoid (rather than reduce) capital gains Let me know if I can assist further - if you have all you need then please do take the time our to rate the level of service I have provided Thanks Sam
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