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Where Taxpayers and Advisers Meet

Gift and repurchase same day. Pooled cost

swt77
Posts:2
Joined:Mon Mar 29, 2021 9:59 am
Gift and repurchase same day. Pooled cost

Postby swt77 » Mon Mar 29, 2021 10:29 am

Hi,

I transferred an asset into my wife's name to make use of her CGT allowance. An hour later I re-bought the same asset. The nature of the asset allows the transaction to be time stamped to show the purchase followed the gift disposal.

When working out the cost basis for the gift, do I calculate the sum prior to the repuchase or including the cost of the repurchase?


Thanks in advance

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Gift and repurchase same day. Pooled cost

Postby Jholm » Tue Mar 30, 2021 12:08 pm

Transfers between husband/wife do not attract CGT - they take place at 'no gain / no loss'.

What this means is, if your wife sells the asset, your original cost is used.

It sounds like you are trying to uplift the base cost in advance of a future sale?

Can you specify what the asset is and some values?

swt77
Posts:2
Joined:Mon Mar 29, 2021 9:59 am

Re: Gift and repurchase same day. Pooled cost

Postby swt77 » Wed Mar 31, 2021 7:55 am

Thanks very much for the reply.

The question was really how I work out the base cost for the transfer.

The asset was a crypto currency for which the same rules as shares apply.

I understand that there is a 1 day/30 day share màtching rule but I'm unsure if that applies post-gift.

I would have assumed once you gift all holdings of a particular an asset to your wife (at no gain/no loss) you ultimately are left with no holdings. It would stand to reason to me that if I buy more of the same asset (even on the same day following disposal) I would have a new higher base cost for the asset.

My wife having received the gift would have the lower (original) base cost for the asset.

I would have been happy with my logical reasoning but the software I'm using to calculate the gain isn't doing it like that.

Instead the software is using the share matching rule to calculate the base cost for the gift despite the re purchase happening after the gift disposal.

The inention was to collectively (between my wife and me) hold the same assets but use her cgt allowance.

i.e

I have 2 oranges and 2 apples.

I gift my wife 2 apples.

She sells her apples to buy oranges.

I sell my oranges to huy apples.

Uncle Google hasn't helped with working out the share matching rules following a gift and I want to get it right.

Apologises for the long reply.


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