buying a house in joint names for my sister then signing over once I am repaid

[notlob]

Please can someone help me ?
My sister is getting divorced, I propose buying a smaller house for her in joint names paying stamp duty (of course) and then when she sells her house taking my name off the deeds when she repays me for the house.
Does anyone know what tax implications if any we are liable for
Thank you
notlob

[mike.hayes@firstcapi]

Notlob,

I assume you already own another house which is your main residence. If not, no problem.

In purely technical terms you have a potential CGT liability when the house is transferred to your sister. She is a 'connected person' therefore if your share of the house is worth more on transfer than you paid for it there is a gain on the difference. In effect you have 'gifted' the profit to your sister.

In practical terms this may be below the annual exemption and therefore not taxable, but keep an eye on the market and don't delay transfer.

Mike

Mike

[jbaileycta@btopenwor]

You don't mention a mortgage, so I assume you are funding the purchase of the house from your own resources.

If that is the case, one way to avoid a CGT liability here would be for your sister to buy the house in her sole name, with you providing the funds by way of a private mortgage. A solicitor should be able to arrange this for you.

At the risk of stating the obvious, any interest you sister pays you should be declared as your income.

James Bailey, Chartered Tax Adviser
jbaileycta@btopenworld.com