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Capital Gains Tax CGT and buy to let mortgages - tax and financial advice from independent financial adviser (IFA) Isis Financial Planners

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Isis Financial Planners' Maggie Fleming answers reader's questions in Saturday's Daily Telegraph newspaper for the Property Clinic section.

There is a wealth of information on all aspects of property and tax from Capital Gains Tax and Inheritance Tax to other technical and challenging issues of this complex subject. This page shows the articles for September 2009. To browse the articles from a previous year, please visit the main Property and Tax page of this website.

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  • Buy-To-Let Mortgages And Capital Gains Tax (CGT) - 23 September 2009
    • In the Nineties we sold our home and, because of bank difficulties, our daughter and son-in-law bought us somewhere to live on a buy-to-let mortgage. We provided the deposit and pay the interest (as rent) and maintenance costs. My daughter is now divorced and she and her new husband are taking over the mortgage. We’ve been told we’re responsible for half the £13,000 capital gains tax incurred by the ex-husband, but no one has made any profit and no money has ever changed hands so where is the gain?
    Maggie Fleming writes:

The gain will have arisen because your daughter and former son-in-law owned a property that was not their only or main residence. He has relinquished his interest in the property. This is a disposal and he has been taxed on the gain - that is, the difference between what his interest was worth when the property was purchased and when he gave it up. Your daughter or new son-in-law will have bought his share at its market value at the date of disposal, so the gain on it will be lower than that on your daughter's original share when the property is sold. As the house is not for sale, I assume that a settlement has been worked out to compensate the ex-husband and that this is why you are being asked to pay part of his tax bill. Legally, you have no tax liability, as you own no part of it. All that has happened is that part of the CGT liability has been accelerated.

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