Cgt on selling a property to nephew.

xpression101

Hi.
Im selling my property to my Nephew.
Sale price 250k market value. 320k

Original purchase price with indexation , etc 100k

I will pay cgt on 150k
Nephew will pay cat on 70k.

Will i still need to pay cgt on the 70k gift....?

Thanks for your help. I will get tax advise so just preparing myself for the worst.....

barneystinson

xpression101 wrote: »

Hi.
Im selling my property to my Nephew.
Sale price 250k market value. 320k

Original purchase price with indexation , etc 100k

I will pay cgt on 150k
Nephew will pay cat on 70k.

Will i still need to pay cgt on the 70k gift....?

Thanks for your help. I will get tax advise so just preparing myself for the worst.....

You pay CGT based on market value.

Your nephew gets a credit against his CAT liability for CGT you pay on the same event.

So you pay CGT on 220k.

Nephew receives a gift of 70k, uses up the relevant CAT threshold, has a CAT liability of X amount, but this will be fully relieved by a credit of X as your CGT bill will have been substantially higher than X.

xpression101

Thanks for your post reply

So i pay 72K. Tax on 220K

My nephew pays i believe 5K. Tax. With all his allowances, but he can claw this 5K back because i paid 72K?

barneystinson

xpression101 wrote: »

Thanks for your post reply

So i pay 72K. Tax on 220K

My nephew pays i believe 5K. Tax. With all his allowances, but he can claw this 5K back because i paid 72K?

He pays zero. His 5k is covered by the 72k you've paid on the same event.

Calahonda52

barneystinson wrote: »

You pay CGT based on market value.

Your nephew gets a credit against his CAT liability for CGT you pay on the same event.

So you pay CGT on 220k.

Nephew receives a gift of 70k, uses up the relevant CAT threshold, has a CAT liability of X amount, but this will be fully relieved by a credit of X as your CGT bill will have been substantially higher than X.

Interesting
Re the relief, doe this still clock up on the Group B threshold?

barneystinson

Calahonda52 wrote: »

Interesting
Re the relief, doe this still clock up on the Group B threshold?

Yes. The person is still receiving a gift of X amount, which uses up their relevant threshold, and it's only when you get to the stage of having calculated their capital acquisitions tax liability that you then compare this to the CGT paid (note PAID, not PAYABLE) by the person who made the gift and take credit.

xpression101

After discussion with my nephew, he may not use up his lifetime allowance (re the gift), as the amount of cgt i pay in total is alot more than he will pay on cat,

Therefor he still has gift allowance in case of any other gift in the future.

barneystinson

xpression101 wrote: »

After discussion with my nephew, he may not use up his lifetime allowance (re the gift), as the amount of cgt i pay in total is alot more than he will pay on cat,

Therefor he still has gift allowance in case of any other gift in the future.

The amount of CGT you pay has no bearing on how much of his threshold he uses up.

xpression101

Hi and Thanks


My understanding is : element of Double Taxation...

If I pay more CGT than my nephew pays CAT, he can Claw back the CAT

If I pay less CGT than my nephew pays CAT, I can Claw back the CGT

but As I am Paying a lot more CGT, My Nephew does not need to use up his gift allowance.


if i sold to a stranger less than market value, i would not have to pay CGT on market value and Stranger would not have to pay CAT.

Peregrinus

xpression101 wrote: »

Hi and Thanks


My understanding is : element of Double Taxation...

If I pay more CGT than my nephew pays CAT, he can Claw back the CAT

If I pay less CGT than my nephew pays CAT, I can Claw back the CGT . . .

No. You pay CGT calculated on the market value of the property you have disposed of. On the figures in the OP, that's CGT on a gain of 220k. You pay that amount. As far as you're concerned, that's the end of the story. There will be no clawback for you.

Your nephew calculates his CAT liablity on the market value of the gift he has received (320K). Then he deducts the amount of CGT you have paid. If, as will be the case here, the amount of CGT you have paid equals or exceeds his calculated CAT liablity, that reduces his liablity to nil.

xpression101 wrote: »

but As I am Paying a lot more CGT, My Nephew does not need to use up his gift allowance.

If he gets the gift, it counts towards his lifetime allowance. The amount of CGT you do or don't pay is irrelevant; all that matters is that he got a gift with a value of 320k. The only way your nephew can avoid "using up his gift allowance" is by not getting the gift, which obviously leaves him worse off than getting the gift and taking the hit to his lifetime allowance.

xpression101 wrote: »

if i sold to a stranger less than market value, i would not have to pay CGT on market value and Stranger would not have to pay CAT.

Why in God's name would you sell to a stranger at an undervalue?

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Perhaps stating the obvious here, but if it's your primary residence you pay no CGT on it.

xpression101

Thanks again


Why in God's name would you sell to a stranger at an undervalue?[/QUOTE]


happens a lot ! market value of house is example 500K, stranger wants to but it and offers you 450K for quick sale, you take it because you need the quick sale and the money.

Stranger is better off by 50K, but does not pay CAT.

its only that im selling to a relative that i had to get the banks surveyor in to give a market value and that is what was used for Market value, we cant change that.



thanks for your help... much appreciated

xpression101

Adrianna Unimportant Battalion wrote: »

Perhaps stating the obvious here, but if it's your primary residence you pay no CGT on it.

was only my PPR for 7 years,
had my Father in there for 2 years aswell after i purchased second house as he was old and sick.


so I can reduce CGT by a percentage of 7 years out of a total of 21 years I have the house

7/21 = 33%

so i get 33% off my CGT charge i.e 67% of gain is taxable (at current rate of 33%)


again thanks for all the input here,