Dear Experts
I am hopeful you can assist with my tax queries related to a long-standing property dispute with a sibling.
2004 - a property was purchased by my father, myself and my sibling, the title deeds being held in joint names (joint tenants). Purchase price of property was £232k.
2007 – my father passed away and the property title deeds were transferred into the names of my sibling and I. As sibling and I had already been on the deeds, the property was not referenced in the will. The mortgage was cleared by my father’s life insurance and my sibling and I received no other inheritance.
2016 – house was valued at £400k.
I am trying to appraise the below scenarios. I currently have a mortgage on my own primary residence and I own no other properties except for that owned jointly with my sibling.
Option 1:
I sell my primary residence, buy out my sibling and move into the property.
If fair market value is £400k, I pay sibling 50% - £200k.
I’m aware that I will incur SDLT on the £200k and CGT when I eventually sell the property.
Assuming I spend £50k repairing the property and sell it for £500k, what would the CGT calculation be based on?
Option 2:
As per the above, except I pay sibling more than FMV for their 50% - £300k instead of £200k.
I’ve essentially bought 75% of the property off them, when they only own 50%.
Is this possible and what would the implications be?
If it’s not possible, are there tax implications of me “gifting” £100k to my sibling, separate to the sale/purchase of the property?
Many thanks!
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