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Anybody know about capital gains tax and joint property ownership?

8 replies

momentrylapseofreason · 01/08/2006 21:18

I know its a bit boring but can anyone offer any advice. If a property was owned by 3 people as an investment, and 1 of those people used it as a main residence - would the whole profit when sold be subject to CGT or just the percentage owned by the people who did not live there? Hope that makes sense!

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BonyM · 01/08/2006 21:29

As long as a property has been your main residence within the last 2 years any profits from sale are exempt from CGT. At least, this was the case when before I went on maternity leave in Dec. 2004!

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momentrylapseofreason · 01/08/2006 22:11

Is that the case if 3 people own the property and only 1 lives there? Would the other 2 be liable for cgt on their share of profit?

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Prufrock · 01/08/2006 22:15

Yes they would. But CGT is only payable on profits above £8,500 for eah person, and your get taper relief depending on how long you have owned it - I have the exact figures in front of me and can work out the tax for you if you want to know the amount

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FrayedKnot · 01/08/2006 22:16

I think...but don;t know for definite, the person who lived in teh property would be exempt from CGT and the others would be liable on their share of teh profit.

HTH.

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momentrylapseofreason · 01/08/2006 23:26

Thanks - do not have any definite figures - really complicated situation - relative has to sell their house quickly but house not selling - we are looking at buyig at a reduced rate (could not raise full amount ) we would then sell on (after some minor work / tidying)for market value giving relative top up so they did not in reality sell at reduced rate. But my understanding is that we would be hit hard for cgt as they would see the difference in the amount we paid for the house and sold it so as profit - when in fact it won't be IYSWIM. Not sure is that will make any sense!

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FrayedKnot · 02/08/2006 14:37

Yes it does make sense and yes I think that is how you wold be taxed. Also, you would get no taper relief so would be paying maximum amount, as you would be selling the property so quickly after buying it.

Are any of you non tax payers?

Because the profit will be treated as income so if you don't pay any tax, you will get your normal annual allowance & pay tax at teh lower rates until (if) you reach the income tax threshold for 40%.

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momentrylapseofreason · 02/08/2006 17:03

Thanks for advice - why is everything always so complicated!

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Prufrock · 03/08/2006 09:09

You could buy the house for it's full market value, (so that would be the price on Land reg docs and for tax purposes) but not actually hand over all the cash yet - some of it could be on an IOU basis.

The only issue with this would be that if you are officially buying/selling th house twice there will be stamp duty to pay on it twice.