Capital Gains Tax

Reporting of CGT and allowances

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Hi all.

Im hoping you may be able to hellp I have some questions regarding submission of CGT report.

I think I know the answer to the first question but will ask anyway in case anyone knows a clever eay round this.  I have recently sold a prooperty which I let privately to my sister for a number of years, however was owned via a shared equity loan, therefore when the property sold 50% of value was repaid to the housing association.  Do I still need to pau CG on this half??  Im assuming I do, but thought I would ask if there was any grey areas with this sort of ownership.  To be clear the housing association was listed on the deeds, but I was 100% owner.

Also I dont have all receipts for original work done to the property (it was bought as a reposession several years ago so had new bathroom, kitchen wiring etc.)  We also had a large worshop built on the land but again for this I do  not have receipts as they are in my son's name (was his workshop)  Can I claim any relief for this, without having every receipt etc?

Had we bought it as a buy to let obvoously would have kept all this paperwork but was bought as a private residence and therefore didnt see the need to fine tooth accounts etc.

 Hope someone can assist.

Many Thanks Mandyjo   

Replies (21)

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By Wanderer
04th Nov 2021 15:08

Mandyjo wrote:

 Hope someone can assist.


Yes, an accountant will be able to assist you.
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Replying to Wanderer:
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By Leywood
04th Nov 2021 15:36

Just to add to Wanderer’s comment, there are mostly Accountants/Tax Advisors who provide responses on here, but we don’t work for free.

To be clear, this is a forum for Accountants to exchange information with other Accountants.

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Replying to Leywood:
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By Mandyjo
04th Nov 2021 18:48

Have no problem with paying for help, was simply asking the question before wasting anyone's time.

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By More unearned luck
04th Nov 2021 18:28

If you and the HA shared the equity how can you have been at the same time the "100% owner"? And why would 50% of the proceeds be paid to the HA if it owned zero equity?

You need to understand what you owned and what the purchaser bought. My guess is that the HA was landlord and you the tenant (if the property was in England, at least) and that the purchaser bought the lease from you and the freehold reversion from the HA. How was the 50:50 split between these elements was arrived at?

Are you allowed to sub-let shared ownership properties? How did you qualify for the scheme in the first place?

Get your solicitor to explain to you what you owned and what you sold and why they only paid you, the 100% owner, 50% of the money?.

You have 60 days from completion to make the CGT return and pay the tax.

Much of the expenditure, if not all of it, sounds like repairs and thus should not be in your computation unless the property was a tip when you bought your share of it. If the expenditure is capital why didn't the HA chip in?

It does sound, though, that you need paid-for professional advice, especially if the lease had less than 50 years to run.

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Replying to More unearned luck:
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By Mandyjo
04th Nov 2021 18:53

No it's is 100% freehold property owned by myself was a shared equity scheme which basically allowed low earning people to buy a property with 50% mortgage and 50% equity loan, however in return when property sold then 50% of sale value is needed to repay loan. Rather than amount borrowed. Therefore whilst I fully owned property I therefore only received 50% of the sale proceeds after the equity loan repaid. Though now I've retyped that I am guessing the equity loan would be treated in exactly same way as mortgage repayment. But thanks for taking the time to read and reply.

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Replying to Mandyjo:
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By David Ex
04th Nov 2021 20:48

Mandyjo wrote:

No it's is 100% freehold property owned by myself was a shared equity scheme which basically allowed low earning people to buy a property with 50% mortgage and 50% equity loan,

So it was a scheme to allow low earning people to acquire a buy-to-let property?!

More unearned luck wrote:

Are you allowed to sub-let shared ownership properties?

That was my first thought although I guess it’s water under the bridge now.

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Replying to David Ex:
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By Hugo Fair
04th Nov 2021 21:49

Exact details (which may yet be pertinent) of the scheme would be interesting ... but there have been rather a lot of them over the last 20 years, as successive govts tried to 'tackle' the housing crisis with handouts (usually benefitting the builders and/or HAs more than anyone).

50% mortgage + 50% equity loan would however be very unusual ... no deposit from buyer? And, as you say, very unlikely for BTL purposes.
But unless the scheme terms have a direct bearing on ownership / profit-share / CGT issues ......

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Replying to More unearned luck:
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By Leywood
04th Nov 2021 19:23

[quote=More unearned luck]

''You have 60 days from completion to make the CGT return and pay the tax.''

Could still be 30. Depends on sale date.

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Replying to Leywood:
By Paul D Utherone
05th Nov 2021 09:36

Leywood] <p>[quote=More unearned luck wrote:

''You have 60 days from completion to make the CGT return and pay the tax.''

Could still be 30. Depends on sale date.

Completion date if later
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Replying to Leywood:
By Paul D Utherone
05th Nov 2021 09:37

EDIT: Duplicate

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By Hugo Fair
04th Nov 2021 19:53

It's actually an interesting question (to which unfortunately I don't have the answer).

A shared equity loan (as can be inferred from the word 'loan') does not usually confer ownership on a 3rd-party ... so it is quite likely that OP was indeed 100% owner, albeit with charges registered against the property (from the 'shared equity loan' provider and possibly other mortgage/loan providers).

So, by default, the owner of the residential property (without PRR) is liable to CGT on the sale of the whole property.
The need to repay the loan(s) from the proceeds has no bearing that I can see on a private (rather than business) sale - anymore than it would do if it were a standard bank loan.

It's unfortunate if, as is common with shared equity loans, the cost of repaying the loan is tied to a %age of the sale price (rather than the amount originally loaned) ... but presumably OP was (or should have been) cognisant of this when agreeing to buy the property through this channel.

However, as I said at the start, all this is based on logic/guesswork ... and anyone with relevant experience should feel free to correct any mistakes or mis-assumptions made by me.

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Replying to Hugo Fair:
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By Tax Dragon
04th Nov 2021 20:25

Another bit of logic/guesswork... the HA interest doesn't amount to BO (and is therefore a loan) because (here's the guess) the HA doesn't share in a loss - repayment is higher of 50% and the original amount. Or something like that. If it's 50% whatever befalls, isn't that BO (but IANAL, IAIPNAPL)?

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Replying to Hugo Fair:
By SteveHa
05th Nov 2021 09:07

Arguably, would the excess of the loan repayable over the original loan be a cost of sale? It doesn't appear to be interest, and only comes into charge because of the sale of the property.

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Replying to SteveHa:
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By Tax Dragon
05th Nov 2021 10:12

Even if that's right, I don't see it meets the conditions of s38(2). If it doesn't meet those conditions, it's not deductible. (But I acknowledge there have been many discussions in here about s38, without full agreement being reached as to what is and what isn't deductible, so feel free to explain the arguable argument.)

But I don't think it's right anyway - for me it's a payment for the use of money. Or 'interest', for short.

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Replying to Tax Dragon:
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By Hugo Fair
05th Nov 2021 12:47

Above my pay grade, but if you're interested (sorry) in whether something counts as 'interest', then try to buy a house via Islamic finance products:

"In one type of agreement, the bank can directly buy the property you want. Then they sell it to you at a profit and let you pay it back in instalments. This is also called a ‘murabaha’ contract (because they are buying the property and selling it to you at a profit).

Or you can buy the property jointly with a bank, in what is called a ‘musharakah’ (partnership) contract. Then over time you gradually pay the bank for its share of the property.

In both cases, the bank charges you extra to cover their costs and to reflect the fact you’re living in a property they partly own."

I guess the key difference to OP is in that final para, as apparently OP has 100% ownership from day one.
I had wondered whether the 'excess' (of amount repayable greater than original loan) would be a cost of sale - but thought I'd wait for wiser heads to opine.

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Replying to Hugo Fair:
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By Tax Dragon
05th Nov 2021 12:56

Hugo Fair wrote:

I had wondered whether the 'excess' (of amount repayable greater than original loan) would be a cost of sale - but thought I'd wait for wiser heads to opine.

I suggest there is a clue in the fact that the cost would not exist had the property value not increased. (It's thus a cost of sale just as much as CGT is.)

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Replying to Tax Dragon:
By SteveHa
05th Nov 2021 13:58

But similarly, the cost would not exist had the property not been sold.

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Replying to SteveHa:
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By Tax Dragon
05th Nov 2021 14:58

Same as any other mortgage redemption/equivalent finance cost.

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Replying to Tax Dragon:
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By More unearned luck
05th Nov 2021 15:42

I don't know what the oxymoronic term "equity loan" means. But if means that the lender is entitled to a share of the proceeds either in lieu of interest or in excess of any interest due and not paid then I suggest the top line of the OP's CGT comp should begin with her share of the proceeds.

If the lender isn't entitled to any of the proceeds other than in their application in clearing the debt, then the top line should be 100%.

Discuss.

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Replying to More unearned luck:
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By Tax Dragon
05th Nov 2021 16:02

See Tax Dragon's comment recorded as posted at 20:25 on 4th Nov 2021.

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Replying to Tax Dragon:
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By More unearned luck
08th Nov 2021 20:35

Have you thought about seeking treatment for your illeism?

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