Unuasual and complicated CGT issue

[Worried partner]

I would appreciate any help on how my partners family can resolve this issue.

In 1981, my partner's father left home and was ordered to leave the house to her mother and the four children, to continue living in it. He and my partner's mother had never paid a mortgage on it as the house was given to him by his parents many years earlier. However, when he left, the solicitor put the house in five equal shares for my partner's mother, my partner and her three brothers and sisters (all on the title deeds).

Since about 1985, the children have grown up and left home and have different tax liabilities (some with own homes, even 2nd and 3rd homes, others earning below 20% tax band).

My partner's mother continued living in the house but now, as she gets older and it's too big for her to manage, the children want to sell it so that she can either rent or buy something smaller.

Q1: Are the children (now adults) liable for any CGT on the sale as they have not lived there for a number of years? (If they are, then I presume CGT rates will differ for the circumstances and tax rates of each person).

Q2: Is there any way round this issue i.e. can the property be transferred to one name or gifted in any way, with incurring CGT liabilities for anyone?

Q3: Is CGT payable if another house is bought immediately and still in the five names?

Thank you.

[Nigel Lord]

This is a complicated issue.

Answering your specific questions:

1. Yes there is exposure to CGT however, this may be less than you think after taking into account all of the available reliefs.

2. There are some planning opportunities that could mitigate, eliminate or defer the tax.

3. It is not possible to 'roll-over' the gain into a second residential property.

I would suggest that you seek bespoke advice. The first thing to do is to establish the CGT exposure (if any) and then plan around the circumstances of each of the owners.

If you would like assistance regarding this matter, please do not hesitate to contact my firm who will be pleased to act on your behalf.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk