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Ho Ho Ho, It’s Magic
Ho Ho Ho, It’s Magic
By Marie walshe In Uncategorized Posted October 22, 2017 0 Comments

I have a client who bought a house for his daughter a few years ago because his daughter could not get a mortgage. House and Mortgage in clients name. Client now wants to sell and sale price is £260k compared to purchase price £125k so as it stands a significant CGT bill at 18%/28%.

Daughter paid my client rent to cover the mortgage payments. Client has never lived in the property.

Is there anything that can be done in these circumstances to avoid this tax charge where in reality this is the PPR of the daughter but from a CGT perspective it is not!

Sometimes, it’s like knitting fog, isn’t it? The potential CGT liability almost becomes a penalty for your client not seeking professional advice, before the original and “artificial” transaction took place.

Seemingly, everyone involved in this arrangement has shot themselves in the foot, trying to do right by the daughter but failing to secure sound advice?

Id say your client was stuffed myself.

Your main room for wriggle would be if he was holding the property as a bare trust for the sole benefit of his daughter, but it seems to me that is not the case with rent being paid.

I often use the phrase “I am an accountant not a magician ” in such circumstances.
I would also stress the fact he has doubled his money. And this is a good thing.

If you need an accountant to perform some magic on either, drop me a line at mariewalshe@certax.co.uk

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