My client and his wife own a second property and she recives the rent. There son is also on the deeds so a third each.
The son is now buying a flat and does not want to pay additional stamp duty. So he is being removed from the second property deeds. The property has increased from £285000 to £380,000. Will the son have capital gains tax ?
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What do you think?
The answer will depend on the true facts. The mere recording of the son as a co-owner does not tell us what he owns beneficially. Did the son contribute to the acquisition costs?
His mother is collecting all the rent. It is therefore at least arguable that removing his name from the deeds, presumably then recorded at the Land Registry, is non event for tax purposes.
the house was left to the family on the death of the Mums mother .
Interesting arrangement. Three people own the property and one receives the rent.
Who'd've thought that might lead to an anomaly ?
I'd read
as meaning the rents had been taxed a third each. Other interpretations are possible, though the ones I can think of give the same answer.
Aside: that carnmores hasn't called out any of the above responses teaches me either that not all sarcasm is boorish or that I detect/read sarcasm in/to the written word way too readily.
Damn the diet of Blackadder repeats you fed me in my formative years, Mother.
the mum reports all the rent on her tax form and pays the tax
Why, if it's a third each?
Assuming he is the beneficial owner (there are loads of threads on this with various views and interpretations), then he has a gain. He can pay this out of the money his parents are giving him when they buy him out. Assuming they are paying him, do you know why they entered into this arrangement in the first place?
as I said the Mum's mother died and left the property to them. Not sure if it was left to the Mum and Dad only.
First job is checking the will then surely?
Why come to us with "happens" dressed up as "facts" ?
I am pleased to confirm that it would, indeed, be possible to make up some more 5h1t which would result in the son not having a capital gains tax liability.
It is not automatically the case that the recording of three people on title deeds equates to each having a one third interest.
We still do not know why grandson's name is on the Deeds. If Mum who died left property to her daughter and spouse, without grandson being an heir, for instance,then including grandson on title might have been[but not necessarily] a gift to him,or a Variation of Mum's will, but the fact that only client's wife is receiving the rent could be evidence that grandson has no beneficial interest.
Did son know he had an interest in the property .
Was he a minor when Mum[his grandmother]died? If he was not named an heir in Mum's will, then during his minority "his" share of the income was assessable on his parents anyhow.
You do tell a good story in the absence of facts.
Has anyone given this "can of worms" any professional time and consideration?
I thought not.
the property was in fact owned by the Dad and Mother as tenants in common. When she died the Dad added his wife and son to the deeds. Then prepare a declaration of trust so the wife received the rent. The son was just on the deeds and now wishes to be removed .
You know your 5h1t.
(Note: your, not you're.)