Following on from the Wills and executors thread...
I was left half a house by my father, my wife bought out the inheritor of the other half. We've let it for a couple of years and are now selling it. No doubt CGT will rear its ugly head so can anyone point me to a clear and authoritative description of how to work out what we're likely to have to hand over? I've Googled but not found the elusive combination of clear *and* authoritative!
En el artículo , F escribió:
What makes you think you're going to find it in a Usenet group relating to DIY in the UK? Prat.
In message , F writes
The acquisition value of your half will be the probate value or whatever was put on the Inland Revenue form when the estate was valued.
Your wife's half is what she paid: assuming it was done properly.
As joint owners you each have an annual CGT allowance £10600?
You should be able to deduct money spent on improvements and Estate Agents fees.
There should be some worked examples on the HMRC site.
IANAtax expert:-)
>
How about
Is a very good answer.
And if you want to check the answer you end up with you could look at the checklist in
Thanks. I had found that but it seemed light on detail. I'll re-read.
Try reading and appreciating the *informative* posts on a host of similar subjects rather than posting abusive drivel. There's a wealth of relevant experience and knowledge in uk.d-i-y as demonstrated in the 'Wills and executors' thread I referenced and you missed quoting. Unfortunately, prats like yourself feel inclined to provide noise rather than signal.
Thanks. there are some useful links within it.
Because almost everything else seems to get posted here, I'd suggest. Surely the best people to ask are the government dept who collects the tax, as it were. Brian
I'd go along with that.
This is where it might start to get complicated depending on what it says on the Land Registry. ie who (singular and plural) actually has title to the property.
If the property is held jointly, the percentages held by each party might be fun to work out. You can't really just take the ratio of the two aquistion values whe the aquistions are at different times:
(A) aquires half of the property valued at £100k by probate. (B) aquires the other half later for £200k as property prices have risen.
They both own a "half" each but (B) has a far larger investment. If the property is disposed of for £350k each "half" is £175k so (A) faces CGT on 75k but (B) has made a £25k loss...
Divided on investment ratios (A) faces CGT on £16.6k, B on £33.3k
I can't decide which is "fair" I suspect the rules will go for the half each split rather than investment ratio but don't know.
For CGT? I don't think so. You can put those against the rent recieved to reduce Income Tax on that rent.
Nor me!
Taper relief may come in as well.
Surely you've defined it right there by describing each portion as a "half". It's too bad for B. And remember that A's portion is also now worth the £200k as property prices have risen.
The CGT liability however will depend on what each paid for their share.
It is generally thought that the Land Registry shows owners but it can't be relied upon for beneficial ownership (who is entitled to how much of a property). In the vast majority of cases a property registered in joint names is owned in equal shares. But there are many possible exceptions. A trivial one is where property is owned by 5 or more people.
This is tax so it's not really a matter of what's fair but of what the law requires. IIRC that is that each owner deals with their share of the property and their share of relevant costs. From what the OP said, each owns half.
That's covered in the link Andy Wade posted.
"You can deduct costs of buying, selling or improving your property which reduce your gain. These include: a.. estate agents' and solicitors' fees b.. costs of improvement works, eg for an extension (normal maintenance costs don't count, eg for decorating)"
What you deduct when computing profits from a property business is spending on repairs and maintenance. It's basically a divide between current and capital spending - with capital spending dealt with along with capital gains.
Yes, but its not a cumulative allowance.
If your asset makes 20k in year one and 20k in year two and you sell it then you only get a 10600 allowance for the year you sell it, ie the tax will be on 40k - 10600.
With shares its common to bed and breakfast them, you sell them and buy them back to use up that years allowance. I doubt if many do that with property.
In message , dennis@home.?.invalid writes
Capital gains is a tax on inflation.
OK when there was an indexation allowance.
If you have already used up part of your annual CGT allowance you can defer the sale until the start of the next tax year.
Point of order... I was told the taxation point is when the sale becomes irrevocable. I.e. no one can back out. Also, you can't sequence the sale and get two lots of allowances:-(
IIRC yes - and no: if a transfer of beneficial ownership takes place then the date for tax purposes is the contract date; but a contract without a transfer of beneficial ownership is not a disposal.
You are reminding me why I always hated CGT.
I recall the anti-avoidance rules which prevent depression of market value by transferring property in a series of transactions to connected persons. Eg a pair of Ming vases which mum gives to daughter singly: one alone is worth a lot less than the matched pair. I don't recall anything which bites on arm's lwength transactions if, say, the OP found a buyer willing to buy the house in stages over 2 or more years. But if the OP wants to explore that kind of thing he can pay for advice from someone who knows CGT like wot I never did; or at the very least ask on a tax group/forum. I'm too busy doing crap DIY to remind myself I was also crap at CGT :(
In article , F scribeth thus
A very simple suggestion and well worth doing.
If you know an accountant then go and ask them, it's not usually quite that simple and that sort of advice you would be well advised to take.
Accountant mind, not a solicitor. What I know of them is that they know very little of tax and its implications but they do know how to charge well;!(.....
an individual solicitor might not know about CGT, but most decent firms will have a tax expert on the staff. My father's firm employed a retired tax inspector as an "advisor".
Thanks to everyone (but the Troll) for their input: much appreciated and the kind of detail I was looking for.
Wise advice: thanks!
Preferbaly a Tax Accounant and one dealing with individuals rather than one who does company books and company tax matters.
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