Partnership owns BTL but one wishes to cash-out

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    #31
    WHAT does your accountant think, and why?

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      #32
      the tax problem

      Hi the accountant brought the problem up she thinks the tax man will want his share of any perceived theoretical profit, I disagree but what do I know? at the moment the house is in about £20k negative
      equity but as I said I'm in it for the long haul so I'll stick, would love to tell my mate just to walk away but that's another story!
      cheers
      Steve

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        #33
        What profit.

        You still haven't told us what you think the property is worth.

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          #34
          property

          hi, the house is probably worth about £60k-ish, after more talks with my partner he's willing to walk away as we've just found out our tenant has done a runner and left us quite a mess, his heart's not in it so he's leaving it to me aren't I lucky! anyway wish me luck
          Steve

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            #35
            Originally posted by stevem View Post
            hi, the house is probably worth about £60k-ish, after more talks with my partner he's willing to walk away as we've just found out our tenant has done a runner and left us quite a mess, his heart's not in it so he's leaving it to me aren't I lucky! anyway wish me luck
            Steve
            I wish you luck.
            'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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              #36
              So the house cost £75k. i.e. £37.5k each

              It is now worth £60k. i.e. 30k each.

              And it is in 20k negative equity, i.e. the bank loan is 80k. i.e. 40k each.

              If your mate gives you his half, then the CGT computation is: Deemed proceeds 30k, less cost 40k, loss on sale 10k. No tax.

              Why you would want to take on his 40k liability when you are taking on an asset worth 30k is beyond me, but he's your friend not mine.

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                #37
                IMHO, it seems that your friend should be paying you, not the other way round - assuming negative equity and his being released from the mortgage (needs mortgagee consent).

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                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
                  I've put some figures in my reply to a post just now but answers below to your questions.

                  a] £80k Jan 2021 sale price.
                  b] As property purchased before...
                  08-12-2021, 00:55 AM
                • Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

                  1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
                  06-12-2021, 13:51 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

                  Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
                  Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
                  08-12-2021, 00:41 AM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  JP Keates
                  I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

                  Here's the timeline:

                  March 1982 - 1992 3 Owners,...
                  07-12-2021, 18:01 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
                  07-12-2021, 17:28 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by jpkeates
                  Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
                  If it was simply to improve what was then your home, it fails the basic test.

                  Get yourself to...
                  07-12-2021, 16:22 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by AndrewDod
                  The probate resets a lot of the stuff, but my main response was unapproved
                  07-12-2021, 15:36 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by AndrewDod
                  You are really short on detail:

                  Date (year & month) bought in joint names ______ (what % was yours then)
                  Date it converted to your sole name ______ (presumable date of death of parent 2?)
                  Declared vale at probate _________
                  Capital expenses between date of probate 2...
                  07-12-2021, 15:33 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by reluctantlandlord1976
                  We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
                  07-12-2021, 14:53 PM
                • Reply to Caught out by changes to Capital Gains Tax
                  by AndrewDod
                  Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
                  07-12-2021, 14:33 PM
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