My son and wife and two children live in the self-contained ground floor area of a large house. My daughter and I live in the first floor area. Each dwelling has its own council tax and utility bills. The house is owned by myself and my son and daughter as joint tenants. My question is: will we be liable for any capital gains tax (CGT) if we split the title and sell? The ground floor dwelling is now too small for my son and his family so they need to move on. Myself and my daughter would ideally like to move to the ground floor. Or is it more prudent for my daughter and I to stay where we are in the first floor flat and put the new lease/title in our name, and for my son to put the new lease/title in his name and then sell just the ground floor flat?
Arthur Weller replies:
I suggest you get tax advice about possibly implementing the exchange arrangements outlined in HMRC’s guidance, so that your son can have full ownership over the ground floor part, and you and your daughter can have full ownership over the first floor part (this is not the relief described in HMRC’s Capital Gains Tax manual .Then each part can be disposed of in a tax efficient way, using principal private residence relief, according to your family plans.