This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Marketing

A bit of data which remembers the affiliate who forwarded a user to our site and recognises orders from those who become customers through that affiliate.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

When will I be liable to capital gains tax?
I have a bungalow that I have owned and rented out for the last 15 years or so. I want to move into the bungalow because of my age (I am 64) and the fact that I have recently been diagnosed with arthritis in my neck and spine. I plan to pay off the outstanding buy-to-let mortgage and put my youngest daughter as joint owner on the deeds. How will this affect me in relation to capital gains tax (CGT) since I plan to do some work once I have moved in, which may increase its value? If I do have to pay CGT, should I do this when I pay off the mortgage or when I come to sell it? 
 
Arthur Weller replies:  
If you put your daughter as joint owner on the deeds, the default position is that you are gifting her half the property. This means you will be liable to CGT on half the increase in value, between when you originally bought the property and the date you gift to her. This is so even though she is not paying you anything. Since this is the case, you are probably better off gifting to her first, and doing the capital improvements afterwards. If you gift to her any time before 6 April 2020, you need to pay the CGT on this transfer by 31 January 2021 (however, in the future the time period for paying CGT is changing).  

This question was first printed in Tax Insider in October 2019.

Tax Insider Lite

FREE tax strategies delivered to your inbox every month.

  • By clicking on the button below you agree to the terms & conditions and the privacy notice of the website.
  • Subscribe for FREE