Capital gains tax liability on property

The bottom line is that your wife has had the profit and she has to pay the tax on it. Next time seek professional advice first.

Peter Crosland snipped-for-privacy@spamcop.net

as the gain has been made and realised there is nothing you can you.

Point 1 - you should have taken advice at the time the transfer was made and you would have been told what the likely outcome would be.

Point 2 - were you not advised at the time of sale of the property.

This is happening more and more so other readers beware, structure of your financial affairs is very important.

Richard

How long ago was the transfer of the property made into your wife's name? Was it before or after April 1988?

John Pointon Accountant, Tax Consultant "In business to grow your business"

what is the relevence of the date?

Richard

Under S 226 Taxation of Chargeable Gains Act 1992, where an individual owns a property which is occupied rent free by a dependent relative, and has been in the same occupation since 5 April 1988, a gain arising on the disposal of that property attracts principal private residence relief.

A dependent relative in relation to a taxpayer (or spouse) is:

any relative unable to maintain themselves due to old age or infirmity; and

a widowed, divorced or separated mother.

John Pointon Accountant, Tax Consultant "In business to grow your business"

Thank you for thar.

Richard

David said

But you only have to pay CGT on the profit - is it really that much?

You bought a house a few years ago and have recently sold it, no doubt at a substantial profit given the current propert market. SO PAY THE CGT AND STOP COMPLAINING FOR F*CK'S SAKE! Where do you think the money comes from to pay for the care & maintenance of vegetables like your MIL?

You might have an argument that the 3 of you are the beneficial owners (which is what interests the IR) whilst your wife is the legal owner. Your MIL's share would be exempt as her PPR (assuming she lived in the property all the time), and your annual exemption could be used (if not already used elsewhere). This could help reduce/eliminate the CGT bill.

You can roll over gains, and quite possibly end up paying no tax, by investing in companies under the Enterprise Investment scheme (or possibly Venture Capital Trusts depending on when the sale was made). However, that has some fairly significant risks and you wouldn't see the money for several years.

Thanks for all the replies.

(Unfortunately, John, she moved in after 1988 so no dice there).

One further thought occurs to me... my wife and I have recently got into the buy-to-let game, and bought our first such property in same tax year as the flat was sold (ie 2001-2002; so will be declaring this in our imminent tax return as an acquisition).

Because we've shelled out a substantial sum on the BTL house (which we own jointly; and from which we won't realise the gain until we sell it, in X years' time) - is there some way that this outlay can be offset against the gain my wife made on the flat?

Thanks

David

Unfortunately not - there is no roll-over relief for BTL.

I didnt think you could roll over gains from residential investment property, which I am presuming this must be if it is not a PPR.

That is correct - but CGT deferral (no matter what the source of the gain) is available via EIS and VCT investments.

You can't roll over gains *into another investment in property*, but AFAIAA one of the very few ways in which CGT is simple is that it only comes in one flavour, i.e. I don't think gains from residential property are treated any differently to any other gains. Technically VCTs and EIS only defer gains, but in practice it's much easier to sell shares a bit at a time so except for really huge gains you can probably end up paying no tax by using your allowance each year. You also get 20% income tax relief, full tax relief on any gains and income from the investment itself, and in the case of EIS ISTR that any losses on the investment can be offset against income tax.