Capital Gains Tax

Steviesol

Hi,

Lets say, I legally own a house which my parents live in, they pay the mortgage. I wish to sell this house and we buy another house and we live together in this new house. Would I need to pay capital gains tax. Asking for a friend, thanks

gerrybbadd

Steviesol wrote: »

Hi,

Lets say, I legally own a house which my parents live in, they pay the mortgage. I wish to sell this house and we buy another house and we live together in this new house. Would I need to pay capital gains tax. Asking for a friend, thanks

Yes.

the house is not your Principal Private Residence so CGT would be due (as long as you are making a gain on the sale of course)

Steviesol

gerrybbadd wrote: »

Yes.

the house is not your Principal Private Residence so CGT would be due (as long as you are making a gain on the sale of course)

Okay, it was my friends pricipal private resisence until she moved out, she owns no other property.

barneystinson

When you say the parents pay the mortgage, is it the daughter's mortgage they're paying?

If so this would appear to be a payment in the nature of rent to their daughter. I.e. In return for the use and enjoyment of the house they're lodging money into an account every moth, sounds like rent doesn't it?

Alternatively there's gifts going in every direction. She's gifting them the free use of her house on the one hand out of the goodness of her heart, and out of the goodness of theirs they're gifting her the cost of her mortgage... doesn't really stack up when you put it like that, does it...!?

And yes, to answer your OP, she'll be liable to CGT for the proportion of time that the house wasn't her PPR (minus 12months).

Steviesol

Okay, thanks for the replies. Let me add some context.

This is the family home it just happens to be in my friends name and not the parents names. The mortgage is in my friends name too. Granted she hasnt lived there in a decade but it is still the family home. My friend owns no other property.

Would this still be eligible for CGT ? Thank You.

thegolfer

Steviesol wrote: »

Okay, thanks for the replies. Let me add some context.

This is the family home it just happens to be in my friends name and not the parents names. The mortgage is in my friends name too. Granted she hasn't lived there in a decade but it is still the family home. My friend owns no other property.

Would this still be eligible for CGT ? Thank You.

So the parents are renting the property from their daughter, potential IT liability stretching back 10 years.

Also, CAT threshold being eaten up for the daughter if there is a shortfall between the market rate of rent and the rent being paid.

On disposal, she may get a partial exemption from CGT, PPR relief, if she had lived in it for a period of time.

Another view may be that the parents were not in a position to obtain a mortgage, back in the day, yet had the repayment capacity.

The daughter agreed to purchase the property, in her name, on trust for the parents, who would make the payments.

This is a stretched view, however, may reflect a truer position.

Potentially on disposal, the parents are selling, and not the daughter, who may be able to avail of PPR relief.

Peregrinus

The house "just happens" to be in your friend's name? Was this due to a slip of the pen during the purchase transaction, or is there some reason for it? The parents are paying the mortgage? Out of the goodness of their hearts, or is there some other dimension to this arrangement that you are coyly withholding?

On the face of it, this house belongs to your friend and when she sells it she'll have a gain. It's not her PPR; therefore she'll be liable to CGT. It is irrelevant that it is the home of some of her relations. Depending on the facts, she may be able to get some partial relief on the basis that it was her PPR for part of the time that she owned it.

However it may well be that, correctly analysed, there's an arrangement in place under which your friend is simply holding this house on behalf of her parents, who are paying for it but who for some reason that you haven't mentioned don't want there name on the title. If this is the state of affairs it may well be that the sale proceeds are in fact due to her parents, that any gain is theirs, not hers, and that as the house is there PPR they are exempt.

Or the situation could be more complex still, with the true ownership of the house shared between your friends and her parents.

It's lawyer time, I think. This is not a situation that you are going to get sorted out adequately on an internet discussion board.