Readers' forum : Helping hand

15 May 2018

Issue: 4647 / Categories: Forum & Feedback

Capital gains tax on property sale when a gifted deposit is involved.

I have a client who has a buy-to-let property in which his brother has been living and paying him rent. My client now wants to sell the property to his brother. The sale price (and market value) is £260 000. My client is gifting the deposit of £65 000 so he will receive £195 000 in actual sales proceeds.

I have examined Day and Anor v Revenue & Customs [2015] UKFTT 142 (TC) which found that the gifted deposit amount was not subject to capital gains tax but in this case the transaction was not between connected parties.

My query is whether my client will be subject to capital gains tax on the whole market value or whether the proceeds for tax purposes will be the market value less the gifted deposit. Note that the mortgage company is aware of the gifted deposit and is happy to proceed.

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