This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Selling Rental Property - CGT Allowances with Deed Trust

Martintaxes
Posts:37
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:37
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:8507
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:37
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:8507
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:4262
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:8507
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:4262
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:8507
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:4262
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.


Return to “Property Taxation”