Help with CGT please

Help with CGT please

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Husband and wife purchase property 50/50 in 2004 for 118k.

In 12/13 they separate.

In 13/14, the wife and her 2 sisters purchase the property for 125k and they now own it 1/3 each

How will the CGT calc work for the wife?  She did own 1/2 but now owns a 1/3 so effectively she's sold 16.66666% so is she assessed on 16.6666% of the whole gain.  Or is she assessed on 50% of the gain?  But surely you can't sell a property to yourself? 

Also if the property is sold in future, what is the wife's base cost? 1/3 of £125k?

I appreciate it's all under her CGT exemption no matter what way its treated but I am curious of how this should work.

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By Andywho is fed up
21st Dec 2014 20:58

You are looking at this from the wrong angle

H has disposed of 50% and that is nothing to do with you.  W owned 50% and now owns 33.3%.  So, as you say W has disposed of 16.67% of the whole property but her disposal is only 16.67/50 of the entire property.  Therefore when you work the fractions backwards it equates to 1/3rd of her previous holding and that is the disposal that you are looking at.

 

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By petersaxton
21st Dec 2014 21:09

Not right

"So, as you say W has disposed of 16.67% of the whole property but her disposal is only 16.67/50 of the entire property."

16.67/100

was it PPR at any stage?

The disposal wouldn't have to be reported on the tax return.

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By johngroganjga
22nd Dec 2014 08:26

How much of the £125,000 did

How much of the £125,000 did the wife receive?

PS (EDIT)

Or, to put it another way, when you say the property was purchased for £125,000 do you mean rather that the husband received for his 1/2 and the wife received for her 1/6 a price that valued the whole property at £125,000, which was funded equally by the wife's two sisters? 

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