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Where Taxpayers and Advisers Meet

Selling Rental Property - CGT Allowances with Deed Trust

Martintaxes
Posts:24
Joined:Fri Apr 28, 2017 12:25 pm
Selling Rental Property - CGT Allowances with Deed Trust

Postby Martintaxes » Mon Dec 13, 2021 2:27 pm

Hi,
Please can you help me regarding the sale of a BTL and what CGT allowances can be claimed.

My wife owns 99% and I own 1% of the property under trust deed, which supported a Form 17 many years ago now.

Would we both still get our full CGT allowances in this case, or would we have to resubmit a new trust deed for 50/50 ownership and a new Form 17?
Many thanks in advance.
Martin.

Martintaxes
Posts:24
Joined:Fri Apr 28, 2017 12:25 pm

Re: Selling Rental Property - CGT Allowances with Trust Deed

Postby Martintaxes » Mon Dec 13, 2021 2:37 pm

Hi,
Please can you help me regarding the sale of a BTL and what CGT allowances can be claimed.

My wife owns 99% and I own 1% of the property under trust deed, which supported a Form 17 many years ago now.

Would we both still get our full CGT allowances in this case, or would we have to resubmit a new trust deed for 50/50 ownership and a new Form 17?
Many thanks in advance.
Martin.

maths
Posts:8447
Joined:Wed Aug 06, 2008 3:25 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby maths » Tue Dec 14, 2021 5:55 pm

Form 17 allows spouses to be subject to income tax on their actual beneficial interests not on a 50/50 basis.

For CGT each spouse is entitled to an annul exempt amount for offset against the capital gain arising on their % beneficial interest; no new Form 17 is necessary.

However, on a 99/1% split if 1% of the total capital gain is below the annual exempt amount (£12,300) a new Form 17 could be submitted to increase the gain so as to enable full advantage to be taken of the 12,300.

Martintaxes
Posts:24
Joined:Fri Apr 28, 2017 12:25 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby Martintaxes » Sat Mar 19, 2022 10:40 am

Thank you for clarifying.
Will we also have to have to create a new Deed of Trust to return things onto a 50/50 beneficial basis, prior to the sale, and to match up with the new Form 17?
Many thanks,
Martin.

maths
Posts:8447
Joined:Wed Aug 06, 2008 3:25 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby maths » Sun Mar 20, 2022 7:12 pm

In the case of jointly held property (ie legal title held by both spouses) if on a sale any capital gain is to be divided differently from your current position of 99/1% then a new declaration of trust needs to be executed confirming how the legal title is to be held eg 60/40; 80/20; 50/50 etc.

If 50/50 is chosen no Form 17 is necessary. Any other % split would also need a Form 17 completion.

bd6759
Posts:3770
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby bd6759 » Sun Mar 20, 2022 10:10 pm

Form 17 only applies to income. Capital gains tax is always charged in proportion to the beneficial interest.

maths
Posts:8447
Joined:Wed Aug 06, 2008 3:25 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby maths » Mon Mar 21, 2022 2:32 pm

I'm unclear with bd's comment suggests he agrees or disagrees with my post.

I comment "If 50/50 is chosen no Form 17 is necessary. Any other % split would also need a Form 17 completion".

With a 50/50 split each spouse will be subject to income tax on 50% each of aggregate income and 50% each of any capital gain.

If the split is say 80/20 then capital gain will be split 80/20. Income however will be split 50/50 unless Form 17 is lodged resulting in income also being split 80/20.

bd6759
Posts:3770
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby bd6759 » Tue Mar 22, 2022 12:54 am

The form 17 has no affect for CGT.

You said that a new form would be needed to reflect the new split. I am saying that is not necessary.

maths
Posts:8447
Joined:Wed Aug 06, 2008 3:25 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby maths » Tue Mar 22, 2022 2:27 am

I said a new declaration of trust (which is not Form 17) was needed to change the 99/1 to any other split.

bd6759
Posts:3770
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling Rental Property - CGT Allowances with Deed Trust

Postby bd6759 » Tue Mar 22, 2022 8:10 am

And then you said form 17 was needed for anything other than 50/50.
If 50/50 is chosen no Form 17 is necessary. Any other % split would also need a Form 17 completion.


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