proceed from joint owner property

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    proceed from joint owner property

    I own a property jointly with my sister. Property is a rented property and im thinking of selling the property. My sister is fine with it as she does not deal with anything and its all my decision although she is a joint owner. My question is when it is being sold, is it possible for me to receive all sale proceeds (profits) as she is ok with that or will my conveyancer say the proceeds have to be shared by both owners.

    Can anybody please help

    #2
    A written confirmation signed by you and your sister and sent to the solicitor who is to complete the sale will be sufficient if it instructs the solicitor that the proceeds of sale are to be transferred into the bank account stipulated in the letter.

    If that was the bank account in your sole name that is an instruction that the solicitor will have to follow since he acts for both of the parties named as the current registered proprietors who will each have signed the instruction to the solicitor as to where the proceeds of sale are to be transferred.

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      #3
      One thing that also should be considered is who is to pay the capital gains tax on the "profit".
      Two people can each take advantage of the Tax Free allowance, so if your sister is really willing to allow you to take the whole of the profit from the sale of this house, it would be better if she receives half, pays the appropriate capital gains Tax on her share and then gifts the remainder to you. Her tax allowance will then have been used so that there will be a savings on the amount of tax paid if only one person was to receive the proceeds of sale.

      Comment


        #4
        Originally posted by pilman View Post
        One thing that also should be considered is who is to pay the capital gains tax on the "profit".
        Two people can each take advantage of the Tax Free allowance, so if your sister is really willing to allow you to take the whole of the profit from the sale of this house, it would be better if she receives half, pays the appropriate capital gains Tax on her share and then gifts the remainder to you. Her tax allowance will then have been used so that there will be a savings on the amount of tax paid if only one person was to receive the proceeds of sale.
        Even if the sister agrees that her entire share will be donated at the point of sale, she still has to pay capital gains tax on that share.

        Comment


          #5
          Thank you, this is really helpful. It looks like I should think about capital gains tax beforehand.

          Can I ask, can sale profit be split into different proportion rather than half each even if though we have been paying rental income tax on half half basis.

          Comment


            #6
            Yes though you do need to own it in that exact proportion, and have paid the CGT involved in achieving that. Rent between non spouses can be distributed (with expenses in the same proportion) in an agreed ratio different to that of actual beneficial ownership

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              #7
              The personal allowance for Capital Gains is £12,000, so if the total profit from the original buying price and the selling price less the costs involved in the sale is more than £24,000, then the balance above £24,000 is taxable so that the two named owners will need to pay the tax within one month if the sale is completed after April 6th 2020 due to the new procedure that will be introduced by HMRC on that date.
              From 6 April 2020, the individual or trust will have 30 days to report their capital gains tax due and pay what they owe. For example, if the sale is completed June 12, the reporting and the payment would need to be completed by July 12.
              Then the situation is whether each of the named owners pays capital gains tax at the standard rate or the higher rate depending on their other income in the tax year.

              The point is that as long as each party is able to take advantage of the personal CGT allowance of £12,000 if either one needs to pay a higher rate of tax due to the level of their income, it may need the co-owners to work together to ensure that the minimum amount of tax is paid. Then the sister can gift money to the brother once payment of the correct minimum amount of tax has been resolved.

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                #8
                I appreciate the detailed explanation of how cgt works. I want to be more specific, in my case I own half of property and my sister the other half on land registry documents as joint tenants (owners). So, when we sell it can we split proceeds on 90:10 basis in my favour. I pay mortgage and manage the Lettings, basically everything. my sister is just joint owner with joint mortgage. Both of us are basic rate taxpayer. (I’m not sure if I should be asking these in the tax section here)

                Comment


                  #9
                  You need to say why -

                  For CGT purposes you will each still be liable to CGT on 50%

                  Splitting the proceeds is a different matter (you are allowed to give gifts)

                  You could change the ownership split before you sell, but then you will pay CGT on that change - which may help if it is in a different tax year.

                  I think this is basically the same question as before. What exactly are you trying to achieve?
                  Even if the immediate sale proceeds are received by you each at the point of sale there is nothing stopping her writing you a large cheque voluntarily. Or are you trying to achieve something involuntary?

                  Comment


                    #10
                    The reason is because I paid the deposit when we bought the house and we agreed that she pays me half deposit back but that didn’t happen. Circumstances changed and my sister was no longer interested in the property although her name is still on mortgage and title deeds.

                    it looks like the best way would be for us to pay cgt first and then she will pay me voluntarily as gift. She doesn’t want to get involved too much so that’s why initially I thought I could receive all proceeds myself and pay all cgt due.

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