Combined CGT ?
Discussion
blade7 said:
Hi, when selling a second property that is only in one name is there a CGT benefit in transferring it into joint ownership beforehand, also if one owner hasn't used their full tax allowance for several years can any of that be claimed against CGT ? Thanks.
Who are you thinking of transferring half to?CGT annual allowance is a "use it or loose it allowance" so no c/fwd of unused relief is available.
David
IT certainly worked a few years ago, I transferred 50% of a house from my sole name to be jointly owned with my wife immediately before an arm's length sale to a third party. We were then both able to use our individual CGT allowances against our respective halves of the gain and her "cost" for CGT calculation purposes was the same as mine, half of the original cost.
Assuming that the law in this regard has not changed (and I do not recall seeing any changes) there may, therefore, be a benefit depending on the amount of the gain and the potential CGT on that gain. There will be legal costs for the transfer to joint names which needs to be done properly and these costs would need to be taken into account when calculating whether such a transfer would be of financial benefit. Also I can't remember whether there was any stamp duty (which would need to be factored into any calculations) but think not.
Assuming that the law in this regard has not changed (and I do not recall seeing any changes) there may, therefore, be a benefit depending on the amount of the gain and the potential CGT on that gain. There will be legal costs for the transfer to joint names which needs to be done properly and these costs would need to be taken into account when calculating whether such a transfer would be of financial benefit. Also I can't remember whether there was any stamp duty (which would need to be factored into any calculations) but think not.
Is the OP talking about CGT or IT?
They are both separate and have their own individual allowances.
From a CGT point of view it is perfectly feasible to have the property in joint names. The important thing is that the transfer of part ownership is done properly with all the necessary legal elements properly carried out.
They are both separate and have their own individual allowances.
From a CGT point of view it is perfectly feasible to have the property in joint names. The important thing is that the transfer of part ownership is done properly with all the necessary legal elements properly carried out.
The planning works from both a CGT and income tax perspective. Depending on what your respective marginal tax rates are, there could be both a CGT benefit (annual exemption which reduces the gain) and income tax benefit (which determines the tax rate at which gains are taxed. Gains are taxed at your marginal tax rate).
The filing with the land registry is just one of the tasks that need to be done. You will also need to have the deeds altered and the legal work carried out to ensure proper title is transferred.
If there is a mortgage involved, then the mortgage company will need to be notified and perhaps permission obtained from them too.
If there is a mortgage involved, then the mortgage company will need to be notified and perhaps permission obtained from them too.
As no one else has mentioned it yet, it would be inadvisable to make the transfer if the property was already up for sale. HMRC are looking into property sales and individual tax returns.
As you state it is a potential sale and you haven't done anything about it yet, but I would also be wary about making the transfer and immediately putting the property on the market. It could be seen as tax avoidance. Though I would suggest it doesn't take much to satisfy this if HMRC came knocking.
As you state it is a potential sale and you haven't done anything about it yet, but I would also be wary about making the transfer and immediately putting the property on the market. It could be seen as tax avoidance. Though I would suggest it doesn't take much to satisfy this if HMRC came knocking.
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