Capital gains tax.

[Dennisj]

Myself and two colleagues bought a house in France some 7 years ago, one of  them wants to sell his share which we are willing to purchase.

There are 2 points: Would the sale of his share be liable to capital gains tax, also, would the sale be treated as new ownership with regards to starting the ownership back to day 1 losing the tax benefit (reduction in rate payable after 5 years and subsequent 10%  reduction per year) when the remaining co owners come to sell.

Regards.

[phylisbide]

Having bought our friends out a few years ago - hope this helps. We had three valuations done by local agents, received wildly differing figures so got another to see if there was a balance somewhere - took an average to determine the figure. They paid CGT on the gain on their half. Having purchased their half, that became day one for the ownership of the second half for us - the first half started when we originally purchased. Thus we have owned one half for ten years and one half for five. This would determine our CGT if and when we sell - I assume the cut off date is still fifteen years with decreasing percentage liability  until then. Someone will surely correct me if I am wrong!!! Hope it goes smoothly and that you can remain friends. phylis

[Dennisj]

Hi Phylis,

Thank you for the reply it helps a lot, did not consider we would have to have the property valued, imagined we would just agree a figure and that was that.

There is no problem with the friendship, it is just that one wants to free some money to help his children out.

Dennis.

[phylisbide]

suppose there is no need to have a formal valuation done - if you are all happy with the figure you have reached - we just had no idea at the time what the work  we had completed to a near-wreck of a house had done to the value after five years of joint ownership. The notaire also demanded that our friends  had a termite/lead survey as we were the buyers of the other half - seemed like money for old rope for the survey co. but it was insisted upon so we went ahead with it. PB

[Dennisj]

Hi Phylis

Have to wonder what the situation would be in the "lost it in a game of cards" scenario!

Re the termites survey, I live in Devon and another case of termites has just been discovered here so I suppose you never know.

Regards,

Dennis.

[parsnips]

Hi,

       If the price is not in line with market values the tax authorities may investigate what they will see as a possible fraud.

[Dennisj]

Hi,

We are not attempting to defraud, if he sold low to pay less tax now then we would pay it instead when we eventually sell, as we will one day and definitely before the 15 years are up.

Dennis.

[parsnips]

[quote user="Dennisj"]Hi,

We are not attempting to defraud, if he sold low to pay less tax now then we would pay it instead when we eventually sell, as we will one day and definitely before the 15 years are up.

Dennis.

[/quote]

Hi,

     It's the notaire who takes the CGT ,and he will have a view on whether the price is reasonable or not. What you may or may not do in future will not influence him.