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Keeping it in the family; Non-resident tax; Nearing retirement; Flat rate dilemma
Keeping it in the family
How can CGT liability be mitigated when selling a house to a relative?
Michael owns a house which he bought many years ago for ￡100 000. It now has a market value of ￡375 000. The house has been let for many years and is now empty. Michael plans to sell it to his nephew Paul at market value but Paul cannot obtain a mortgage for this amount so Michael has agreed that he can pay the purchase price over 25 years without interest ie Paul will pay Michael £15 000 each year (but he will have the option to pay additional amounts if he wishes to do so).
As Michael and Paul are connected persons it appears that the sale will result in an immediate upfront CGT liability of £77 000 (i.e. 28% x ￡275 000) for Michael...
