Capital Gains on jointly owned property.
Discussion
This might be a daft question,
My wife owned an investment property as a joint tenant with her father (for over 7 years so no IHT or gift issues), and took all the proceeds when it sold.
For capital gains tax, which she assumes she pays all of, does she tell Revenue & customs that she owned 100% or 50%?
My wife owned an investment property as a joint tenant with her father (for over 7 years so no IHT or gift issues), and took all the proceeds when it sold.
For capital gains tax, which she assumes she pays all of, does she tell Revenue & customs that she owned 100% or 50%?
For clarity, was it sold after her father died?
If so, perhaps there are two events here, 1) acquiring second half of property as inheritance and 2) selling the property, at which point the gain is sale price less costs less half purchase price, less value of half when inherited.
So one half owned from the outset, gain on that, plus one half inherited, any gain between inheritance and sale dates.
You'd need to check that!
BTW you need to report sales of investment property, and pay any CGT, quite soon after sale I think, not wait to tax return time.
As ever, most of what people need to know is on the .gov.uk website, somewhere, and failing that asking HMRC themselves is free and often easy.
If so, perhaps there are two events here, 1) acquiring second half of property as inheritance and 2) selling the property, at which point the gain is sale price less costs less half purchase price, less value of half when inherited.
So one half owned from the outset, gain on that, plus one half inherited, any gain between inheritance and sale dates.
You'd need to check that!
BTW you need to report sales of investment property, and pay any CGT, quite soon after sale I think, not wait to tax return time.
As ever, most of what people need to know is on the .gov.uk website, somewhere, and failing that asking HMRC themselves is free and often easy.
She has received 50% of the property as a gift from her father. Therefore there are two Capital Gains involved.
Capital Gain No.1 is the difference between what she paid for her original share of the property and 50% of the sale proceeds.
Capital Gain No.2 is the difference between the Market Value of the property at the date she legally acquired the gifted 50% of the property and the other 50% of the sale proceeds.
Capital Gain No.1 is the difference between what she paid for her original share of the property and 50% of the sale proceeds.
Capital Gain No.2 is the difference between the Market Value of the property at the date she legally acquired the gifted 50% of the property and the other 50% of the sale proceeds.
Getting beyond my knowledge TBH, but I put this forwards as things to discuss or check out.
If the sale happened without a formal gift/transfer of half the property first, then the property was joint when sold, so the father has a potential CGT liability on his share, with all the complications of being a French taxpayer perhaps?. He then gifted the money, a potentially exempt transfer depending on him enjoying another 7 years?
You sell something jointly, you each get a CGT bill with your own allowance for untaxed profit. buying and selling costs and any capital costs can be taken off the profit. In England that is! If you are a foreign resident selling half a house and giving away the proceeds, you may need proper advice.
If he signed over his half share, then does that transfer attract stamp duty?
If the sale happened without a formal gift/transfer of half the property first, then the property was joint when sold, so the father has a potential CGT liability on his share, with all the complications of being a French taxpayer perhaps?. He then gifted the money, a potentially exempt transfer depending on him enjoying another 7 years?
You sell something jointly, you each get a CGT bill with your own allowance for untaxed profit. buying and selling costs and any capital costs can be taken off the profit. In England that is! If you are a foreign resident selling half a house and giving away the proceeds, you may need proper advice.
If he signed over his half share, then does that transfer attract stamp duty?
The OP said the property was gifted. In order for the "gift" to be genuine, it should have been accompanies by all the legal requirements to ensure that the property was properly transferred to the recipient.
If that was all done properly, the father has had no interest in that property from the date it was gifted and therefore the gain will be taxed entirely in the hands of the daughter.
If that was all done properly, the father has had no interest in that property from the date it was gifted and therefore the gain will be taxed entirely in the hands of the daughter.
Eric Mc said:
The OP said the property was gifted. In order for the "gift" to be genuine, it should have been accompanies by all the legal requirements to ensure that the property was properly transferred to the recipient.
If that was all done properly, the father has had no interest in that property from the date it was gifted and therefore the gain will be taxed entirely in the hands of the daughter.
It's the subtle but important difference between 'selling then gifting' and 'gifting then selling'. Perhaps?If that was all done properly, the father has had no interest in that property from the date it was gifted and therefore the gain will be taxed entirely in the hands of the daughter.
Either tends to imply a tax bill for the father, but it's bound to be more complex if the French are involved.
UK cgt on property is a thing, but it may be less simple?
One might imagine an understanding that the Father's tax bill would be met from the proceeds of course.
But it might still be his bill, and his duty to see the paperwork right.
My wife has always been one of the owners, along with her parents. Her mother died before the sale completed so under French law my wife inherited her share as well as her own. At the minimum she owned 66% therefore.
However as they were jointly and severally liable (not tenants in common with defined shares) do they both not own 100%?
My wife tells me nobody ever asked who had paid how much of the purchase price.
However as they were jointly and severally liable (not tenants in common with defined shares) do they both not own 100%?
My wife tells me nobody ever asked who had paid how much of the purchase price.
Sebastian Tombs said:
My wife has always been one of the owners, along with her parents. Her mother died before the sale completed so under French law my wife inherited her share as well as her own. At the minimum she owned 66% therefore.
However as they were jointly and severally liable (not tenants in common with defined shares) do they both not own 100%?
My wife tells me nobody ever asked who had paid how much of the purchase price.
This is beyond my expertise, but does that mean that when her Mum died, the capital gain of her Mum's share up top that point was accounted for/dealt with/ (can't think of the right phrase) at that point, so now your daughter should be paying CGT on her original share for the whole time and her mum's share since inheriting it?However as they were jointly and severally liable (not tenants in common with defined shares) do they both not own 100%?
My wife tells me nobody ever asked who had paid how much of the purchase price.
I don't know how the % ownership of 'joint tenancy' is decided. AFAIK it's not written down anywhere by the state, if two people agree to go 50:50 or 60:40 that's up to them, and I'm not sure the money put in is a reliable guide anyway. For instance one might put in more capital, the other might pay more bills, isn't that the owner's private business, up to the point when you sell it and need a coherent story for the tax man?
I don't know the answers, I'm suggesting questions to clarify!
It might help to run some rough numbers, if you assume it was 33:33:33 or 25:25:50, what is the scale of the CGT bill?
If the gain wasn't huge, the CGT bill may be zero making the whole thing academic.
Don't forget any costs, fees for buying and selling, any capital bills which weren't 'operating costs' set against rent, stuff bought to make it rentable, travel to make it happen
The other thing is whether you implicitly own half your wife's inherited share, so your own cgt allowance comes in to play? That might be wishful thinking...
But AIUI, you don't have long to work out and settle the CGT if there is any.
I wonder about sharing the CGT allowance with mine. It may be possible, as I have barely any UK income (I get rent which barely creeps over my personal income tax allowance threshold but which has to be taxed in the UK).
The property was bought for 200k-ish, 8 years ago and sold for about 300k. Less fees and so forth at both ends, but lets say we're probably looking at 100k gain.
I'm aware of the time factor. I think we have 60 days, and we only sold it yesterday.
The property was bought for 200k-ish, 8 years ago and sold for about 300k. Less fees and so forth at both ends, but lets say we're probably looking at 100k gain.
I'm aware of the time factor. I think we have 60 days, and we only sold it yesterday.
Sebastian Tombs said:
I wonder about sharing the CGT allowance with mine. It may be possible, as I have barely any UK income (I get rent which barely creeps over my personal income tax allowance threshold but which has to be taxed in the UK).
The property was bought for 200k-ish, 8 years ago and sold for about 300k. Less fees and so forth at both ends, but lets say we're probably looking at 100k gain.
I'm aware of the time factor. I think we have 60 days, and we only sold it yesterday.
Why would you "share" your CGT allowance?The property was bought for 200k-ish, 8 years ago and sold for about 300k. Less fees and so forth at both ends, but lets say we're probably looking at 100k gain.
I'm aware of the time factor. I think we have 60 days, and we only sold it yesterday.
Who owned the property on the date of the sale?
Eric Mc said:
She has received 50% of the property as a gift from her father. Therefore there are two Capital Gains involved.
Capital Gain No.1 is the difference between what she paid for her original share of the property and 50% of the sale proceeds.
Capital Gain No.2 is the difference between the Market Value of the property at the date she legally acquired the gifted 50% of the property and the other 50% of the sale proceeds.
Sorry don't mean to hijack but if a child inherits half a house on first death and it is then held via a trust with surviving parent and as tenants in common, is there then any CGT due on any uplift on the first 50% of value stated when its sold? Being in trust it is effectively worthless as you cant sell it or do anything with it till 2nd death? The value is realised at point of sale? CheersCapital Gain No.1 is the difference between what she paid for her original share of the property and 50% of the sale proceeds.
Capital Gain No.2 is the difference between the Market Value of the property at the date she legally acquired the gifted 50% of the property and the other 50% of the sale proceeds.
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