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Posted Mon, 04 Oct 2021 19:54:50 GMT by chalkman
The residential property has two tenants-in-common owners and one has to pay CGT as a non-resident on sale of his 50% share. Gain for 50% share is calculated by taking current value of whole property less original whole cost and dividing by 2. The cost of improvements can be used to offset the gain, but can the 50% owner claim the total improvement cost or just half of it? If the owner selling his share never paid for any of the improvements as they were all paid by the other owner, can he still claim either half or full value of the improvements as an exemption? If the 50% owner is gifting his share (not to his spouse) rather than selling it, is he still liable to pay CGT?
Posted Tue, 05 Oct 2021 08:39:41 GMT by HMRC Admin 17

He can only claim his share so if he only owns A 50% share then he can only calim 50% of any expenses.

Please see guidance here on gifting a share.

This would potentially still attract capital gains :

Capital Gains Tax relief on gifts and similar transactions (Self Assessment helpsheet HS295)    and :

Capital Gains Manual   .

Thank you.

Posted Tue, 05 Oct 2021 09:27:29 GMT by chalkman
Thank you. I assume therefore that a 50% owner selling his share can claim 50% of improvements as an exemption from CGT even if he never paid for them!
Posted Wed, 06 Oct 2021 08:39:57 GMT by chalkman
Further to my question about who paid for improvements, if an owner with 50% share as tenant-in-common can use the cost of improvements he didn't pay for, does it follow that improvements paid by a council or charity or a friend can also be included in the total of improvements used as an exception in a CGT calculation, subject only to apportionment according to share of ownership?
Posted Thu, 07 Oct 2021 07:37:56 GMT by HMRC Admin 19

If the improvement enhanced the value and you own a share of the property you can deduct your share as an allowable cost, please see the links for more details:

Tax when you sell property

CG15160 - Expenditure: categories of allowable expenditure

Thank you.
Posted Thu, 07 Oct 2021 12:04:47 GMT by HMRC Admin 2

You can find guidance on expenditure here:

CG15150P - Capital Gains manual: introduction and computation: computation: expenditure: contents

CG15150 - Expenditure: introduction

Thank you.

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