CGT and tenants in common

[Professor Plum]

Hi to everyone.

I have three properties held in joint names with my now ex partner. These properties are held as tenants in common in unequal shares, myself owning 75% and my ex partner 25%. My ex partner now wishes to liquidate her assets and so it is proposed that I buy her out at todays market price.

The properties have increased a fair bit since purchase and so there are capital gains involved.

Am I correct in assuming that it is only her percentage of ownership which triggers a disposal for her and mine is left alone to the point in the future when I decide to sell.

Any help would be appreciated, thank you.

[Tax Accountant]

Hi,

Yes, your understanding is correct.

It is only your ex-partner who is selling her share and it is only this share which is a disposal for CGT purposes for her only. I assume that she is selling her share to you at market value as this is the value which will be used in the calculation of her CGT.

You are the buyer and you will acquire her share at market value. When you eventually sell the property, your cost for each property will be made up of two elements. One will be your original acquisition of the 75% share and the other the 25% acquisition now being contemplated.

She may wish to consider selling her shares in different tax years as this may help her in reducing her CGT bill.

I hope this helps.

Ramnik

[Professor Plum]

Thank you Karongo for your prompt reply.

Reference your first paragraph, purchase will be at market value and so her CGT will be calculated as such.

I will also suggest she gives some thought to more than one tax year.

Thanks again.

[Tax Accountant]

Thank you Karongo for your prompt reply.

Reference your first paragraph, purchase will be at market value and so her CGT will be calculated as such.

I will also suggest she gives some thought to more than one tax year.

Thanks again.

You are welcome.

Ramnik