Capital gains

[Haribo16]

Can anyone clarify if capital gains is paid from the time a deed of gift has been completed or from the time the property was purchased, i.e., the growth from that point minus the initial outlay? It might be important to mention that there were no capital gains paid when the deed of gift was completed. Thanks for any help with this.

If it’s been gifted to you, how have you purchased it too?

It depends. Look at the HMRC website!

I’m sure it’s the increase in value from when it was passed over to you now selling it.

Thanks for the replies. @WuTangGran I didn't purchase it, but was trying to understand at what point the capital gains is calculated.

@aramox1 thanks will take another look.

@Pollipops1 this is my understanding too, just unsure as to why capital gains were not paid at the point of transfer and whether that may affect how it is calculated.

It all depends who gifted it to you. They probably applied for gift relief so didn't pay CGT.

@Littletreefrog, my dad.

What is Gift Hold over Relief?
Gift Hold-Over Relief is a tax relief that effectively defers Capital Gains Tax (CGT). The relief can be claimed when assets are given away (including certain shares) or sold for less than they are worth to help benefit the buyer. Gift Hold-Over Relief means that any gain on the asset is 'held-over' until the recipient of the gift sells or disposes of them. This is done by reducing the acquisition cost by the amount of the held over gain for the acquirer.

@Littletreefrog thank you.

Your dad should have paid CGT when he made the gift.

It is only gifts between married couples where CGT is paid on the second disposal.

I should have asked what the gift was as there are reliefs available as the pp has said.

This is incorrect. Tax is not normally payable on gifts between spouses civil partners or to charities. People other than spouses can claim gift hold over relief.

The gift is a property but its a rental property and he is a landlord so frlm what I'm reading he is eligible for the gift holdover relief.

@Littletreefrog, am I understanding this correctly that the gain will be calculated from the time of transfer of deeds rather than from the time of purchase but that the initial outlay would be deducted from the growth? This is all new to me so I appreciate your help in helping me understand it.

It's highly unlikely hold over relief was available on a gift of a rental property, and if a claim had been made, the recipient would have had to sign it too. So the base cost for CGT purposes is probably the value at the date of the gift.

@Soporalt thank-you for taking time to reply, am a little out of my depth understanding how this works.

Get an accountant to deal with it, I did, it only cost me £300 for their services but saved me more than that as if I'd done it myself I would have paid more due to my lack of understanding.

Have you tried using the government calculator? I'm not quite sure I you are trying to work out your dad's Capital Gains tax or your own?

Has your dad gifted you the property?
Are you trying to calculate what tax he owes?
Or are you now selling a gifted property and trying to work out what you owe?

https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/disposal-date?_ga=2.56046507.1652112188.1715988295-1257479291.1714666087

@Winter2020 hi, yes I am trying to work out how much capital gains I would owe if I was to sell. Unfortunately the calculator only goes back to 2015 and the deed of gift I believe was 2010/2011. The property was bought for 75,000 and was in my dad's possession for around 25 years. When the deed of gift was completed the property's market value was 275,000. Its now worth 550,000. If my dad has applied for gift hold over relief does that mean I have to pay both the growth from the time it was in his possession and also from when it was transferred?

Was it a Furnished Holiday Let? If not, I don't think that gifts of residental property are eligible for gift holdover receipt.

Did your dad take any tax advice when he gifted you the property?

I'm assuming this is a house or flat. Gift relief would not have been available, so your gain will be calculated based on the value when it was transferred to you. Unless your father was entitled to eg main residence relief, he should have declared the gift (using that value) and paid tax then. However, this does not affect your position. Similarly, you might be entitled to main residence relief. If you do have a liability you'll need to make a return and pay the tax within 60 days of completion, PP sent a link.

You can only claim gift relief on a business asset. A rental property is unlikely to qualify.

Dad should’ve paid CGT but your position is to pay tax from that point.

Qualifying assets for s.260 Holdover Relief
S.260 applies to qualifying disposals which can include both CGT business and non-business assets, including:

• Transfers immediately chargeable to Inheritance Tax (IHT), such as the transfer of an asset into a non-settlor interested trust.

Not sure why you’ve shared this info as it’s not relevant to op situation her dad transferred the property to her not into a trust so won’t have been able to claim holdover relief

Well yes, but given the OP doesn’t mention a trust I didn’t think mentioning s260 relief would be that relevant…