How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4960
Type Your Tax Question Here...
bigduckontax is online now

In 1983 I was living with my parents in a council property

This answer was rated:

Hi, in 1983 I was living with my parents in a council property which was bought by me as an investment but as my parents were the tenants all 3 names were on the deeds. Whilst living with my parents I continued to pay "board" none of which I can evidence. When I moved out in November 1988 or 9 the deeds were signed over to just my name as I converted the mortgage to a secure loan so I could buy my own house and needed a mortgage. I moved to my own property and my parents remained, paying bills and upkeep but not rent. My mother is still there but will be leaving the property soon and I would like to know if CGT will be due if I sell the property although I may let it. Also, would the inital value be the market value or the council discounted value? Many thanks. The property has always had a value of less the £100,000.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. There are key dates and points here which affect the CGT position. Please advise if the following criteria are met [source: This is {edited}]: 'These are: The house was bought and occupied before April 5, 1988One of your parents was 65 or over in March 1982The house was your parents’ sole home for the whole period; andIt was provided to your parents rent-free and without any other consideration.'Once I know this I can fully address your question.
Customer: replied 2 years ago.
Hi Keith, as initial statement and additional information, the property was bought in 1983 and at the time we were all living there as it was the family home.
Neither of my parents were over 65 on that date but both were not working due to ill health. This was there sole home for the whole period and there was no consideration other than they would carryout and pay for general wear and tear maintenance. They did no "improvements" to the property and did not contribute to the mortgage.
Customer: replied 2 years ago.
My parents had been council tenants since the 1940's and I had lived there from 1962. We took advantage of the right to buy so whilst initially had to be in all our names on both the purchase and initial mortgage they did not contribute to the mortgage.
The age factor debars Dependent Relative Relief. Thus you will be liable for CGT on disposal. The portion you lived there and the last 18 months of ownership, when you are deemed to be in possession even if this is not the case, will reduce your exposure. Total ownership time is say 33 years. Occupation time say 6.5 [including the last 18 months] so 33 - 6.5 / 33 will be liable, say 80.3%. Gain is the difference between what you parents paid to buy it in and net disposal price. Without that data I cannot calculate the gain, but you probably can and 80.3% of that 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 sale. You have 11.1K non cumulative Annual Exempt Amount (AEA) to offset this gain. As no rental was charged there is no entitlement to Lettings Relief (LR), a pity as 40K is available through this Relief. I am so sorry to have to rain on your parade.
bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.