House for child

House for child

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Bought house for child in 2002. We have never lived there. Now given to child. Am I right in thinking we only get 85% of proceeds charged as owned for 5 years? Can we also get £40k lettings relief as it has been rent to daughter at commercial rate the whole time. We also have both our annual CGT allowances to offset.

Any extra reliefs appreciated!
Annabel Rose

Replies (4)

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By GrahamASA
18th Sep 2007 23:01

No, John.
Quickly: John, that is not very helpful behaviour. It's a very simple question and if you prefer not to answer then I suggest don't leave an answer at all instead of a comment like that. Your comment is unwarranted, particularly as this is a free website and a question/answer forum.

I agree with the first answer:

85% of your capital gain (not the proceeds or market value) will attract tax. The capital gain, if the house was owned jointly between yourself & your husband, will be apportitioned 50/50 between the two of you and taxed. You could try to re-apportion the gain between the two of you if you have different tax rates. Provided this wasn't done purely for tax avoidance (hint, hint), then an agreement between the two of you where you, for example, would get 80% of the proceeds and your husband 20% of the proceeds may help too.

The £40k is only available to PPR's that are vacated, rent out and then sold. Sorry! Lots of people think the same way you do, unfortunately it's not always available.

The only other "simple" mechanism available is to make sure your capital gains calculation takes all your capital costs into account, not just the initial purchase price but any other capital improvements too. These are often forgotten at the time of the sale and CGT calculation.

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Euan's picture
By Euan MacLennan
19th Sep 2007 10:22

No, Graham
Your comments to John are unwarranted. Even on the brief facts given, this is not an entirely straightforward case and the best advice to a non-accountant, as the questioner appears to be, is to consult an accountant to make sure that all the relevant facts are established and that her and her husband's tax returns are prepared correctly.

One point that neither you nor Phil has covered is that as this is a transfer between connected persons (parents and lineal descendant), it is treated as not being an arms-length bargain and so, the "proceeds" for the CGT computation is the market value of the property at the date of transfer.

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By johnhughesaca
18th Sep 2007 20:04

Stop trying to get free advice
Surely it is worth paying a few pounds to a professional to get professional advice ?

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By Gareth Beck
20th Sep 2007 17:17

Thread has been trimmed
Hi,

I've removed some of the later posts on this thread as it was felt that they had gone off topic.

If there are any questions regarding this please email me at [email protected]

Regards,
Gareth

Marketing Executive - Siftmedia

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