Selling part share

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Selling part share

    5 years ago i gifted part of my property to my son as joint tenants. We lived in the property together. So its possibly a grob.

    Now we want to go our separate ways. Could he buy my share out so he owns the whole house. And i use the money to buy elsewhere. Could this introduce a IHT or POAT problem?
    ​​​

    #2
    I don't know what a grob is in this context.

    It was a gift with reservation, so, unless you are paying rent, the property is still in your estate for IHT purposes.

    As long as your son doesn't live in the new property, I don't see that POAT would apply, but it's not something I have any experience of, so it's worth checking with a professional.

    As long as the purchase is at market value, I don't see any obvious problem other than the seven year issue with the "gift" that already exists.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Grob meaning gift with reservation.

      What if the purchase is below market value. The share is worth a market value of 250k but i can only afford to pay 200k. How will hmrc view it?

      In another view i already made a gift of the property to him as joint tenant, how is the best way of getting my name of the property with incurring cgt or other taxes and loosing the gift with reservation of my name. We dont own any other properties.

      Comment


        #4
        If you gift someone a property (or part of one) and carry on living there, the gift has reservations.
        So you either need to move out or start paying market rate rent to live there to end that situation.

        Any transaction done at an undervalue is treated by HMRC as being at market value, so for SDLT and IHT the property would be seen as transacting at £250k
        If your son paid £200 for the other half of the property, the £50,000 is a gift, but, this time, with no reservation.

        You could have put the property into a trust rather than transferring half as a gift, but it's too late for that now.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Ok thanks.
          So as i already did a gift of the property a few years back. Do i have to to pay cgt on the rest of the property when i gift it over or sell it to son as cash?

          Comment


            #6
            Originally posted by jpkeates View Post
            It was a gift with reservation, so, unless you are paying rent, the property is still in your estate for IHT purposes.
            Although they were BOTH living there and both owned it -- so the share gifted is probably not a GROB. It would be if only the OP was living there (owning only a portion) and not paying rent.

            It depends on the proportion - if the OP owned 1% and paid no rent - I think it would be in GROB territory - if OP owned 50% and lived there with one other person who also owned 50%, and neither paid rent to each other -- not so much GROB I think.

            Otherwise agree with advice given.

            OP did you fail to pay CGT before???? - that may not be good..

            Comment


              #7
              Interesting that it may not be a grob as we own it all together. But surely hmrc will view it as i retained a benefit.

              Its our only main property i dnt think any cgt will be due. I was asking will cgt be due if i make another gift or sell my share to get my name of deeds?
              I ask because of already made 1 gift to make us joint tenants. So would another gift be allowed to get my name off. Is a sale allowed of my share to?

              Comment


                #8
                Bill31,

                Well if CGT was not payable on the first slice it won't be on the second.

                I don't see that you retained a benefit, but I can't find any case law to that effect. But if rent was payable it would have gone in both directions (you would have paid your son half the rent and he would have paid you the same amount).

                Comment


                  #9
                  The reservation will depend (as far as I can see) on who pays the running costs of the property.
                  If the running costs are split in line with the ownership, it's one thing, if the property is run as though it was the mother's house with her continuing to pay all the bills is another.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    Im sure the reservation relies on the person who made the gift.
                    If we was to sell the property and take our 50/50 share of the sale price would that release the gift with reservation if we then went on to buy our own property

                    Comment


                      #11
                      There is no cgt to pay.on the capital gain after sale of your own residence.

                      IHT charged on a deceased person's estate starts above £325K threshold, and is charged at 40% rate.

                      The 50% share of residence gifted 5 years ago, if counted as part of your estate above £325K, will be reduced to about 15% tax rate after 5 years and to 0% rate after 7 years.

                      Comment

                      Latest Activity

                      Collapse

                      • Reply to CGT after selling my main residence
                        by AndrewDod
                        It doesn't have to be let out.

                        If OP lives in house for 5 years, then finds another primary residence (declared as such, or based on the facts) and then sells original house 2 years later, CGT would be payable on 2/7ths of the gain.

                        If the OP had owned and lived in the house...
                        02-07-2020, 17:03 PM
                      • CGT after selling my main residence
                        by Echoes
                        Hi there
                        First of all thanks in advance for your reply. I would really appreciate if you can calify some of my confusion.

                        I have few queries regarding selling my main residence which would impact on how much CGT I would pay...

                        1. I am buying a new house to live so...
                        02-07-2020, 14:14 PM
                      • Reply to Stamp Duty on Freehold House subject to long leases; merge title?
                        by Gordon999
                        Flats must remain under leasehold title or the next buyer will have difficulty finding a mortgage.

                        sdlt is payable on residential property transfers for £190k property , it is 2% on the amount above £125K. i.e 2% of £65K.= £1300.

                        If you already have a property registered...
                        02-07-2020, 15:25 PM
                      • Stamp Duty on Freehold House subject to long leases; merge title?
                        by carolem
                        Am interested in buying freehold house which is divided into 2 flats, both let out on AST. G
                        round floor flat is held under the terms of a Lease dated the 11 November 1987 granted for the term of 999 years from the 1st February 1987 and the first floor flat is held under the terms of a Lease dated the
                        ...
                        Should Nelson Mandela's statute remain?
                        0%
                        0
                        Should death penalty's reintroduction be subject to public referendum?
                        0%
                        0
                        02-07-2020, 10:02 AM
                      • Changes to Landlords tax relief and landlords tax credit
                        by cadence248
                        Good afternoon all,

                        I've been getting to grips with the changes to landlord's tax relief over the last few years. One thing that worries me considerably is that since all rental income is now taxed, and I must pay my loan interest and repayments out of this also, that really doesn't leave...
                        02-07-2020, 15:11 PM
                      • Reply to CGT after selling my main residence
                        by jpkeates
                        If you have lived in your main residence since you bought it, there's no CGT on the sale.

                        If you let it out, CGT would be applicable on the period it was let less 9 months (so if you let it for less than 9 months before selling it, there would be no CGT to pay.

                        You will need...
                        02-07-2020, 14:59 PM
                      • Reply to Returning from oversea landlord taxation
                        by LAN45
                        Thank you....
                        02-07-2020, 14:19 PM
                      • Returning from oversea landlord taxation
                        by LAN45
                        Hello,

                        I have been living abroad and paied rental income taxes, according to legislation, to HMRC as oversea landlord.

                        ue to recent developments I'm moving back to UK looking for a job and would like to understand how to handle paying taxes? I will have no further income for...
                        22-06-2020, 12:15 PM
                      • Reply to Tax Return - HELP!
                        by jpkeates
                        I'd include the 12th month.

                        While you're correct that the income fell into the 2018/19 tax year, you didn't declare it then, which is could trigger a fine and a penalty.
                        It probably won't, but you need to be very careful with your tax - getting on the wrong side of HMRC is a lifetime...
                        02-07-2020, 08:51 AM
                      • Tax Return - HELP!
                        by Brian862107
                        Does anyone know of any good online tutorials/guides for filling out your self-assessment tax return? I don't know about you's but I hate filling out forms (they always ask you to tick a box to say the information you've put in is correct too!!)!

                        This is my first year filling out the self-assessment...
                        01-07-2020, 15:51 PM
                      Working...
                      X