Please help with capital gains tax (uk only)?

Question

hi we need help with capital gain tax?

ok this is the story.

Me and my brother helped our parents buy their council house about (1980's) for £9000 we went thirds and paid £3000 each.

The house is in all our names, now that my father has died there is only my mother that lives in the house now and bless her is not too good. The house is worth now about £100000, and we have just been told that due to capital gains 40% of the house will be taken when we descide to sell it, which is devastating as this was mine and my brothers nest egg. has anybody got any advice on whats the best way forward, is there anyway round capital gains tax or how to reduce how much?

thanks for reading

Answer 1

You've been advised wrongly.  If it was your parents' main residence and you only owned a share in it while they lived there, it is exempt.  Find yourself an accountant.

Answer 2

When I thought I had to pay CG tax it appeared that after 2 yrs taper-relief was applicable and the amount I ended up paying was a lot less. Also it applies per person rather than as a unit. Of course you have the original purchase amount deducted and you have the first so many thousands for free before the rate applies.

I believe CG tax may have had some rules changed recently, but either way you won't end up paying huge sums, if at all.

Answer 3

Firstly, your informant is out of date.  The capital gains tax rate is now only 18% (since 6th April) and this is on the gain, not the selling price.

Are you sure that you bought the house in equal shares?  Under the right to buy legislation I thought that the sale by the council had to be made to the tenant only.  Look carefully at the documentation.  It may be that you only lent your parents the money to buy the house.

If it was acquired by you at the outset then you have to consider each third share separately.

Assuming your father left his interest to your mother then her third would be completely free of gains tax as it was her private residence throughout the period of ownership.

I assume that neither your brother nor yourself has lived there since it was purchased?

Nominally you would each be liable for 18% of your gain, after deducted your annual exemption if you have made no other chargeable disposals in the tax year.  This would mean your liability could be 18% of (33,333 - 3,000 - 9,200) which would be about £3,800 each.

Even this could be avoided if your parents could have been considered "dependent relatives" before some time in 1988 (I think it might be 5th April, or maybe budget day in March).

If you think this might apply have a search and come back with more information or questions.

Answer 4

If this was not your main residence and you owned another property yourself you are libel for capitol gains on your share