capital gains allowance

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    capital gains allowance

    I have a property which I bought 18 years ago for my parents to move near me. I have to sell now, and I understand I will need to pay capital gains tax. I read somewhere that the capital gains allowance could be doubled if assets are transferred to a spouse. Does this apply to a property? And if so how do i do this? Thank you

    #2
    Yes, an inter-spousal transfer prior to disposal could enable the use of 2x Annual Exempt Amount (AEA), and the other spouse's 18% CGT tax band.

    AEA is £11,000 for 2014-15 and £11,100 for 2015-16.

    AEA is available for all CGT disposals including properties.

    However, if it was ever your home, then such a transfer could INCREASE the CGT liability.

    If the property is mortgaged, Stamp Duty Land Tax (SDLT) could be payable.

    If your parents living in the house was/is part of some family arrangement, the circumstances and/or paperwork should be reviewed to check whether a Trust (written or unwritten, express or implied) was involved. This is a complex area and professional advice could be useful.

    Comment


      #3
      Thank you King Maker.
      It was nothing complicated, and I never lived there. They just moved from another part of the country to be near us; I bought the flat, while they were waiting to sell their home.
      I understand from what you say that I can transfer. Would I need to transfer half of the property then, to use two AEAs? Do I need a solicitor to do this? If so, would you be able to tell me roughly how much would it cost, and how long would it take?

      Comment


        #4
        You would need to transfer some share of the beneficial interest in the property, although it need not be 50%. A calculation would be required based on the exact numbers.

        A DoT (Declaration of Trust) can achieve the objective - it has to be drawn up by a solicitor or barrister (if a fee is to be charged). Have you contacted your own solicitor on the matter?

        However, it is important to realise that you will be giving away some of your property. A re-gift back to you could cast doubt on the validity of the first gift. Ideally, the sale proceeds should go into sole bank accounts.

        Comment

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          JP Keates
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        • Caught out by changes to Capital Gains Tax
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          by AndrewDod
          You are really short on detail:

          Date (year & month) bought in joint names ______ (what % was yours then)
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        • Reply to Caught out by changes to Capital Gains Tax
          by reluctantlandlord1976
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        • 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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          by AndrewDod
          When you lived there did you OWN it (ot did your parents own it). Ownership by your parents and residence by them is irrelevant to your CGT calculation. Sounds as if it was rented out all the time that you owned it.

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        • Reply to Caught out by changes to Capital Gains Tax
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