Property co-owned with brother

Hello, could you please help? I am a UK resident. My brother and I own a property in Spain inherited from our parents, I already checked and it would be exempt of any inheritance tax as it is less than the UK threshold. He would like to own the property just himself and he offered me to make a deposit into my UK bank account of 80,000 euros which is less than the value that the surveyor had given us as the current market value of the house. Would I need to pay income tax in the UK for this? Many thanks

Hi Laragoz,

While we cannot comment on scenarios, you would need to work out if a capital gain would arise on the disposal of your 50% of the property.
As the sale would not be at 'arms length', you would need to obtain a market value for the property at the time you intend to dispose of it.
As all parts of the Capital Gains calculation, must be in pounds sterling, so you would need to convert the market value of the property at the time you inherited it to pounds sterling.
You can use the official exchange rates in use at the time and the market value for the property at the time it is disposed of.  
Split both figures 50/510 and subtract the inheritance value from the sale value.  
Deduct any legal costs, estate agent fees etc and if you still have a positive figure, there is a net Capital Gain.  
Subtrace your annual exempt allowance and if a positive figure still remains, this is taxable.  
The official exchange rates can be found here: 
Exchange rates from HMRC in CSV and XML format
There is a calculator here to help you work out the gain, 
Work out tax relief when you sell your home
Thank you. 


 

Hello, Thank you so much for your reply. The value of the property has fallen since my brother and I inherited it. My brother got a valuation from a surveyor for a mortgage, this valuation is less than the value stated by a Spanish notary public when we inherited the property and my brother can give me a smaller amount than the current market value given by the surveyor. Would this mean that there is no capital gain on the sale? Many thanks

Hi
That is correct as a loss has been made.
There will be no tax on the money he transfers.
Thankyou.