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Where Taxpayers and Advisers Meet

Possible CGT Liability

jafarsultani
Posts: 1
Joined: Wed Aug 21, 2019 3:18 pm

Possible CGT Liability

Postby jafarsultani » Wed Aug 21, 2019 3:27 pm

Hi,

Currently my parents, brother and I own two properties. Both my parents and my brother are looking to remove their names from one of the properties, essentially the transfer of deeds will be gifted at no monetary value. It was bought to my attention by our solicitors that this may result in tax liabilities in particular capital gains tax.

Timeline of events

26/01/15 - property A purchased, four titles holders with equal rights, my parents, my brother and I

01/08/16 - we decided to split the land as their was substantial space to build a further property. We obtained the relevant approvals from the council and land registry. The land was split with the same title holders and same equity rights now also on the title deeds of the new land B

01/10/16 - Approval was received from local council to build a new property on this new land. Construction started and was completed July 2017.


Currently my brother and I reside in property B and my parents split their time between both properties. None of the properties have been rented out.

I'm seeking advice on whether if my brother and parents where to dispose of their rights of the property B would they be liable to CGT.

Also do they have the ability to decide which property is their main residence, as this could possibly result in avoiding any CGT on this current property

jerome.lane
Posts: 16
Joined: Mon Aug 12, 2019 8:41 am
Location: Camberley, Surrey
Contact:

Re: Possible CGT Liability

Postby jerome.lane » Fri Aug 23, 2019 9:59 am

Your parents split their time between both properties? This could cloud the position but if they lived in A from purchase then that should be their main home unless they made an election to change it when B was completed (there is a 2 year window to make an election so it is possible that B could be treated as their main home for a period although this will increase any taxable gain on A in the future).

Your brother may be subject to some CGT although will get some relief due to living in the property as his main home. Various deemed periods of occupation could exempt the gain.

you should get a full review and computations prepared and I'd be happy to help if you wish. Good luck!
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203


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