buying partner out of buy to let - CGT liabilty?

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    buying partner out of buy to let - CGT liabilty?

    Hi,

    Tried quick search on here but couldn't find anything that matches!

    Existing scenario:

    property value 220000
    existing (joint) BTL mortgage 150000

    Plan:

    Remortage with new BTL mortgage (in my name)
    use money raised to buy out partner (35k)

    Question:

    WHo pays CGT and how much? (I think I know it's not me!)

    Thanks

    John

    #2
    Your partner will be due to pay the CGT, if any.

    What was the original purchase price and the amount of any capital improvements?

    The mortgage is ignored for CGT purposes.

    Comment


      #3
      Property initially bought about 10 years ago - £160k. This was a residential mortgage and we lived there.
      Switched to buy to let about 5 years ago. Only took out a buy to let mortgage 3 (ish) years ago. Joint names. About 10k raised as part of the remortgage (this was split).
      Now remortgaging in my own name. Paying 30k to transfer equity.

      No capital improvements made.

      Too much info maybe!

      Thanks.

      Comment


        #4
        The mortgages and the equity transfer amount don't have any impact.

        What is the value of the property now?
        The gain will be the difference between the market value today and £160k.

        The gain would be split 50:50 (unless you made specific arrangements) and you would each be liable for your part of it.
        11.5 / 15ths of the gain would be tax free, and you would get some additional letting relief.
        You each have an allowance of £11k taxable growth before any tax is due.
        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
          If you both lived in the property for 5 years , you are entitle to exemption for 5 years + 18 months after moving out. So 6.5 years out of 10 years will be exempt for cgt.

          So roughly 10 K out of 30K capital gain is liable for cgt and this is covered by the 11K personal allowance. . So your partner should have no tax to pay.

          Comment


            #6
            You're right, I read the years wrong and double counted.
            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


              #7
              Hi another question. (she still hasn't signed the transfer papers...)

              She lives in my old family home with the children. My name is still on the mortgage and I pay the mortgage as part of the maintenance arrangement.

              What happens when we sell the house? She lives in it so nothing to pay but does that mean that i'm liable for CGT?

              There's about 150k in that property (equity).

              Thanks,

              John

              Comment


                #8
                There is no cgt charged on owner occupied property.

                Comment


                  #9
                  Hi gordon,

                  Although my name is on the residential mortgage I no longer live there. My partner does and I pay the mortgage

                  David

                  Comment

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