CGT on renovated property
Discussion
I'm after a bit of advice around the CGT aspect of the following situation please
parents bought a property which required complete renovation, the property is almost complete, around 75% done I would estimate however parents have now separated,
currently there is around £85k left on the mortgage however neither due to a significant change in circumstances neither parents have the finances to finish the renovation or even keep up the repayments, as it stands they are both resigned to the fact of the property getting repossessed
my father approached my this weekend to ask my thoughts on whether I would consider buying the property from them for the amount owed (£85k) with a view to completing the renovation and selling once finished and sharing the profits,
as it stands the key numbers are as follows:
£85k outstanding mortgage
£55k to complete the renovations
£450k sale price
I'm a higher rate tax payer
in short what would be left over after mortgage and CGT have been paid
quick note - I'm fully aware the most tax efficient way is to leave the mortgage as it is however this is NOT an option unfortunately
parents bought a property which required complete renovation, the property is almost complete, around 75% done I would estimate however parents have now separated,
currently there is around £85k left on the mortgage however neither due to a significant change in circumstances neither parents have the finances to finish the renovation or even keep up the repayments, as it stands they are both resigned to the fact of the property getting repossessed
my father approached my this weekend to ask my thoughts on whether I would consider buying the property from them for the amount owed (£85k) with a view to completing the renovation and selling once finished and sharing the profits,
as it stands the key numbers are as follows:
£85k outstanding mortgage
£55k to complete the renovations
£450k sale price
I'm a higher rate tax payer
in short what would be left over after mortgage and CGT have been paid
quick note - I'm fully aware the most tax efficient way is to leave the mortgage as it is however this is NOT an option unfortunately
I think you might be misunderstanding GCT - you are a connected party to your parents, so they need to get the house valued (as it stands) and whilst you can buy it from them for whatever you all agree - HMRC will value the house at the surveyor's valuation - eg your parents will pay any CGT on the difference in value between purchase and valuation (less allowable expenses)
I think from memory if the house has got a mortgage on it you also have the pleasure of paying stamp duty
Your CGT will be valued on the price sold less price paid and allowable expenses
Please note that I am not an accountant and this comes from my experience of buying/selling property and may be out of date/wrong - so please check on the HMRC website
I think from memory if would be cheaper (if stamp duty applies to your purchase) to pay off the current mortgage as on 2nd properties this can sting a bit - maybe you can lend you parents the money to do this and they can repay you out of the purchase price
Good luck
I think from memory if the house has got a mortgage on it you also have the pleasure of paying stamp duty
Your CGT will be valued on the price sold less price paid and allowable expenses
Please note that I am not an accountant and this comes from my experience of buying/selling property and may be out of date/wrong - so please check on the HMRC website
I think from memory if would be cheaper (if stamp duty applies to your purchase) to pay off the current mortgage as on 2nd properties this can sting a bit - maybe you can lend you parents the money to do this and they can repay you out of the purchase price
Good luck
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