tax on transfer

[mylifestory]

My parents were joint owners of a house until he died, solely in his name from 1961 to 1982, joint till 1992, then in mum's sole name from 1995 (after a legal dispute!) The house has always been tenanted.

The legal battle over its ownership resulted in a £50K total bill.

The tenanted house was fully renovated and made structurally sound a year ago at a cost of @£100K, about half of which was offset against tax, therefore the rent is still in tax credit.

Last year my mum put the house in joint names with myself (her daughter) as I had provided all the income to fund the project, had overseen it by taking a year off work.

I have now informed our accountant that as the property has been changed to a joint ownership between us and he is asking questions like

- when was the property bought (it was inherited from my dad so no value was ever set)

- details of capital improvements (can I include kitchen / bathroom costs which could not be offset against tax?)

- value of the property at the time of the transfer

I am not sure how to answer these questions, but wondered what CGT tax was payable in the circumstances, and if it was better to get an estimate of the property price as the highest possible when mum inherited it & lowest possible when it was transferred to our joint names - as an example to minimise the tax liability?

also is it better to have the house being solely mum's since 1992 (over the 10 years) or from 1995, or will CGT be worked out from an earlier date?

If anyone knows the definitive answers then please get in touch as I am willing to pay for the right advice before contacting my accountant.

[Ian McTernan CTA]

Not sure I can answer this as there is another accountant involved, coupled with the fact that about half the capital rrenovation costs were claimed against the rental which seems way too high and likely to be challenged by the Revenue.

Suggest you go to your accountant and if you aren't happy with his answer, ask him to seek a second opinion or tell him you are taking further advice.

Your accountant will be able to get possession of the full facts, including the effective date of transfer after the legal battle.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com

[mylifestory]

Thanks for your comments Ian.

Half of the renovation costs have already been approved by the Inland Revenue as some was structural etc so necessary.

Its more a case of whether I should declare the transfer before or after the renovation and other similar questions. My accountant knows it was all done in the past 12 months, but not at which stage of the year.

This is a one off query as my tax will be back to basics next year. If I ask my accountant to sort it out he'll charge me a huge amount and carry on doing so for the years to come. And he hasn't mentioned any details of gift .... or any other ways the tax can be minimised.

Therefore I'd rather pay someone separately for one off advice.

Can anyone help?