Capital Gains Tax on sale of share in family home

Capital G

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My share of my parents estate of £10,000 Irish Pounds was used to assist with the purchase of a new home for my siblings. I have never lived in the property and have never contributed to the mortgage payments even though my name was on the original mortgage.

I have agreed to sell my share to my sibling for 10% of the current market value which is approximately €300,000. Can you tell me if I am liable for CGT on the difference between my original contribution of £10,000 and the 10% valuation now of €30,000, or would the CGT be based on the fact that I originally owned a one third share of the property.
 
Capital Gains Tax is based on the difference between the sales proceeds and the cost.

This is a difficult situation you were given a 1/3 share in the property for a £10,000 contribution.

So how much did the property cost at the start and how does this compare to the current value?

You will be assessed to CGT based on the current value of your share v the base cost.
 
The house was originally bought with a combination of the proceeds of the sale of our family home and a mortgage. My share of the proceeds of the sale of the first property was 1/3. My sibling took out a mortgage for the balance required. The house was purchased for £42,000 Irish Pounds. I now want to sell my share of the property to my sibling which based on my original stake of £10,000 we have agreed on a sum of 10% of the current value. As the property is not for sale i need to confirm if the CGT will be based on the full property value or the 10% we have agreed.

It is very complicated but I really appreciate your response.
 
Just one more point. If the property were to be sold today my 1/3 share would be valued at approximately €40,000 after the existing mortgage had been cleared. Is this the value I would then pay CGT on?

Thanks for your help in advance.
 
Forget mortgages, they're irrelevant to CGT calculations.

All that is relevant is:

1. What the value of your original interest in the property was.
It seems that you paid £10k and received a 1/3 ownership of the property. The property being worth £42k, it appears someone gifted you £4K in value. So your base cost is £14k.

2. As it is a sale to a connected person, the market value of the interest you're disposing of.
It is a 1/3 share of a property worth €X. To effect the conveyance the parties will need an independent valuation for stamp duty and CGT purposes.
Based on what you've posted this will be north of €40k because it's the property value, not the net equity after clearing the mortgage, that is relevant.

Your gain will therefore be €X/3 minus £14k (indexed for inflation up to 2003) minus any costs incurred on acquisition or disposal.
 
So the current market value is €300k.

The purchase price was £42,000

I assume in the 1990s.

So it’s 300k -( €50k (x indexation)) = €240k x 1/3 = €80k - €1,270 = 79k x 30% = €24k!!!!

It’s unfortunate that your name was added to the deeds and that you did not just loan the money to your sibling.
 
So the current market value is €300k.

The purchase price was £42,000

I assume in the 1990s.

So it’s 300k -( €50k (x indexation)) = €240k x 1/3 = €80k - €1,270 = 79k x 30% = €24k!!!!

It’s unfortunate that your name was added to the deeds and that you did not just loan the money to your sibling.

Thanks Joe, I forgot about the €300k figure being in the OP...

Something in the figures doesn't add up fully; someone has obviously topped up the mortgage if it currently stands at €180k (since the OP says his/her 1/3 share is worth €40k after the mortgage would be cleared). When it was bought, the max mortgage would've been about £32k...

Maybe there's enhancement expenditure too, if the top up was related (in part or in full) to work done on the property...
 
The property has been remortgaged in the interim. On point 2 re connected person, is the value of the property relevant or not in this instance.
Or does the fact that my name is on the deeds mean I would have to pay CGT on 1/3 on the value even though I would only be receiving 10%.
I really appreciate your comments on this. Thank you.
 
If you sell the 1/3 of an asset worth 300k you are infact disposing of an asset worth 100k. If you sell this asset to a "connected party" otherwise than by means of a bargain made at arm’s length the Market value applies under S.549.

Further more you are also making a gift of the difference to the "Connected person" ie. 100k less 30k ie 70k. Group tresholds and the same event credit may apply. With regard to the remortgage was any enhancement expenditure incurred?
 
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