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Where Taxpayers and Advisers Meet

Buying out Connected Person

Lockwood
Posts:9
Joined:Fri May 26, 2017 10:32 am
Buying out Connected Person

Postby Lockwood » Thu May 24, 2018 8:23 pm

Hi, hoping someone can advise. I jointly own a property with a relative ( a good idea at the time - not so now ! ) On purchase we put equal amounts in regarding equity. Now the equity in the property is 75/25.
We are looking to part waves. . The property purchase was 150k and now MV is 190k. Is the CGT payable on 20k ( 190k - 150k divided by 2 ) or 75% / 25 % of 40k depending on who buys out who ?
Thanking all contributors in advance.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Buying out Connected Person

Postby maths » Fri May 25, 2018 9:48 am

Was the original property owned 50/50 and subsequently one of you bought 25% of the other so that currently the equity is split 75/25?

Lockwood
Posts:9
Joined:Fri May 26, 2017 10:32 am

Re: Buying out Connected Person

Postby Lockwood » Fri May 25, 2018 11:03 am

Originally I put in 50k to get the transaction in place as it was convenient. Lenders will not lend for a Buy to Let if you are not a homeowner and my sister was not a homeowner at the time. The property was in joint names at the outset. I was repaid 25k later by my sister. Then my sister paid another 50k against the mortgage. So she has 75k invested and I have 25k invested.


Thanks for taking the time to help.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Buying out Connected Person

Postby AGoodman » Tue May 29, 2018 11:25 am

How much of the property do you consider yourself to own? If 25% and you are bought out, you would be taxed on 25% of your gain - so £10k (which is beneath your annual exemption)


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