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Where Taxpayers and Advisers Meet

CGT on jointly owned house where I paid for improvements

Ted1970
Posts:1
Joined:Fri Jun 17, 2022 9:58 am
CGT on jointly owned house where I paid for improvements

Postby Ted1970 » Fri Jun 17, 2022 10:03 am

Hi

Having been gifted 50% by my father I now own half of my parents house - my father the other half - and some years on we are now selling
Since I was gifted my share there have been some improvement works carried out - which I paid for 100% and my father paid none

My question is having paid for all of the improvement work can I deduct 100% of the cost of improvements against my 50% share of the gain since I obtained my share ?

Thanks for any advice

pawncob
Posts:4916
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT on jointly owned house where I paid for improvements

Postby pawncob » Fri Jun 17, 2022 3:09 pm

Yes. The gross gain is apportioned to each individual and you can deduct your additional costs from your share.
With a pinch of salt take what I say, but don't exceed your RDA

bd6759
Posts:3779
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT on jointly owned house where I paid for improvements

Postby bd6759 » Sat Jun 18, 2022 11:00 am

Yes. The gross gain is apportioned to each individual and you can deduct your additional costs from your share.
No. The costs of improvement affect the whole property, not just the share that the OP is selling.

The net gain is apportioned.

maths
Posts:8448
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT on jointly owned house where I paid for improvements

Postby maths » Thu Jun 23, 2022 7:15 pm

The position I would suggest for tax purposes is unclear.

Having said this, where X and Y (non-spouse) jointly hold property if either X or Y incurs expenditure which qualifies for improvement expenditure then the person actually incurring it may deduct all of it. The fact that, Y, may effectively benefit is irrelevant.

This is certainly the position if X and Y have an agreement to this effect but even in the absence it cold be so argued.

X and Y are two separate taxpayers and two separate CGT calculations are necessary.

bd6759
Posts:3779
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT on jointly owned house where I paid for improvements

Postby bd6759 » Fri Jun 24, 2022 11:35 pm

Only expenditure referred in the state and nature of the asset can be deducted.

If an asset could be notionally split then any expenditure incurred by A will also be included in the asset disposed by B. A could only claim half the expenditure.

pawncob
Posts:4916
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT on jointly owned house where I paid for improvements

Postby pawncob » Sat Jun 25, 2022 8:34 am

https://www.accountingweb.co.uk/any-answers/cgt-on-jointly-owned-asset
I think it remains open to debate. I'd claim it in the comp. and let HMRC raise it.
With a pinch of salt take what I say, but don't exceed your RDA

bd6759
Posts:3779
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT on jointly owned house where I paid for improvements

Postby bd6759 » Sat Jun 25, 2022 8:01 pm

The consensus on that thread is what I said.

maths
Posts:8448
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT on jointly owned house where I paid for improvements

Postby maths » Sat Jun 25, 2022 9:32 pm

I don't agree with the accounting web response.

As per my post above in particular "Having said this, where X and Y (non-spouse) jointly hold property if either X or Y incurs expenditure which qualifies for improvement expenditure then the person actually incurring it (X) may deduct all of it. The fact that, Y, may effectively benefit is irrelevant".

bd6759
Posts:3779
Joined:Sat Feb 01, 2014 3:26 pm

Re: CGT on jointly owned house where I paid for improvements

Postby bd6759 » Sun Jun 26, 2022 10:03 am

The fact that all of the expenditure is not reflected in his share of the house is very relevant. S38(1)(b).

He has incurred expenditure on on behalf of the other owner and should be reflected in both computations.


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