If my children own part of my home, will they be liable for capital gains tax?

28 July 2014

Q

If my children bought a certain percentage of my property, would they be liable for capital gains tax if they were then to sell their own home?
From
WS/Glasgow

A

If your children sell their own home, provided it has been their only home or main residence and they've used it as their home and nothing else, then they should be entitled to Private Residence Relief on any gains they make and so would have no tax to pay.

This should be the case regardless of how many other properties or other assets they own or have invested in.

However, if your home is sold in the future or if your children sell their share of your property, then they might have a capital gains tax bill because this wouldn't have been their main residence.They may be able to offset any capital gains tax bill by using their annual capital gains tax allowance, which is £11,000 for the 2014/15 tax year.

A further consideration is that even if you give away or sell all or part of your main property, it might still be considered to be in your estate for inheritance tax purposes if you continue to benefit from it.

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