CGT increase affects parents who helped with house purchase
A local member of Solicitors for the Elderly has warned that people in the county who have helped single adult off-spring to get on the property ladder may need to seek legal advice about their position following tax changes announced in the Budget.
David Cartwright, a partner with leading Oswestry law firm GHP Legal, said today that the increase in Capital Gains Tax to 28% for higher rate taxpayers would undoubtedly affect parents who become joint owners of property and joint borrowers with their adult children.
"Parents often help their adult children to get on the property ladder by paying their deposit or helping them in a business venture," says Mr Cartwright. "Sometimes the mortgage company will insist on their names going on the mortgage and on the deeds. It is also the case that parents understandably want to safeguard their interest in the property and what seemed a wise precaution could well end up costing the parents much more than they expected, following the recent Budget."
"It is likely that the son or daughter will eventually sell up and move further up the property ladder. If this happens, the parents will be liable to pay Capital Gains Tax on the increased value of the property being sold - at 28% if they are higher rate tax payers. Their son or daughter will qualify for principal residence relief on the sale, but for the parents there is no relieving provision available on their investment share."
"When tax laws change it can throw life plans into complete disarray. And this is one of those occasions. I would recommend that any parent who is a higher rate taxpayer and has an interest vested in an adult child's property should seek legal advice on their position and their options as soon as possible."
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