Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Another CGT on property question.

Practical Issues
wickham
Lemon Slice
Posts: 363
Joined: November 6th, 2016, 8:13 am
Has thanked: 34 times
Been thanked: 10 times

Another CGT on property question.

#443628

Postby wickham » September 19th, 2021, 5:18 pm

The HMRC form https://www.tax.service.gov.uk/capital- ... k-property has a check list which includes
"value of the property when you got it
value of the property when you sold or disposed of it
costs of buying, selling or making improvements to the property
details of any tax reliefs, allowances or exemptions you’re entitled to claim"

In my case I had a half share as tenant-in-common and so the values for me were half the total when originally acquired and half when I recently sold my share. However, the improvements made by my brother and myself were not equal. His improvements cost more than mine.

The HMRC form is drafted for a normal house purchase and doesn't really deal with a shared ownership and whether you can include improvements by a third party (anyone, even a government grant). Since he spent more than I did, if I only use my improvements costs and half the total value, it will increase the CGT compared with using the total value and his and my combined costs (more than double my costs, therefore higher exemption and lower CGT). If we had had the improvements entirely funded by a benefactor or government, would I get the benefit of reduced CGT because of that?

If I use half values and only my costs, CGT will be higher, otherwise I will be benefiting from the higher costs incurred by my brother.

Which method is correct?

pje16
Lemon Half
Posts: 6050
Joined: May 30th, 2021, 6:01 pm
Has thanked: 1843 times
Been thanked: 2066 times

Re: Another CGT on property question.

#443634

Postby pje16 » September 19th, 2021, 5:28 pm

I would imagine that if he paid say twice as much as you for the improvements his share of the increased value is twice as much as yours
see this page
https://www.gov.uk/tax-sell-property/work-out-your-gain
hope that helps

Lootman
The full Lemon
Posts: 18678
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6561 times

Re: Another CGT on property question.

#443639

Postby Lootman » September 19th, 2021, 5:37 pm

I would take the view that each tenant reports their own numbers. So for capital improvement costs you use the amount that you personally spent, and the other tenant uses the number that he actually spent.

There is a very good reason for that. You may have no idea how much the other tenant spent, and vice versa. You are not responsible for his tax return and he is not responsible for yours.

And it is not like HMRC look at the two returns side by side, under normal circumstances anyway. Your return is a standalone entity for which you are solely responsible and, as long as you can back up your numbers then you should be fine. You cannot control what numbers the other tenant reports or claims.

I had a case with a 50/50 TIC property where I had paid 100% of the expenses, and collected 100% of the rent. My accountant suggested, and the taxman accepted, me reporting it as such.


Return to “Taxes (Practical)”

Who is online

Users browsing this forum: No registered users and 14 guests