Help - Capital Gains Tax?

[chitchat]

In 1999 my parents put their home in trust to my brother and myself, with the proviso that my parents would be able to live their home until they die. Having immigrated last year my parents now want to sell the house and move nearer my brother. They have just been informed by their solicitor that as my brother and I own the property that should the sale of the house go through we would be liable for capital gains tax. Why? This was never disclosed to us at the time and we are not sure what we can do about it. Is there anything we can do about this? My parents are looking at having to pay a lot of money in tax for being misled and as they are in their 70's they dont need the stress. I am in New Zealand and cant help as much as I would like. Could we sell it (bearing in mind that no money has ever changed hands) for a nominal amount? Any of you clever people got any ideas? Thanks in advance

[buildersmate]

Most of what you require to know is here, in terms of why you would be liable for tax, irrespective of the 7 years having passed.
http://www.hmrc.gov.uk/CTO/customerguide/page6 .htm

[kags]

I assume that your parents were paying a market rent to the trustees for living in the house, otherwise the gift to the trust would not have worked for Inheritance Tax purposes. Without knowing all the facts, I would say that there is no way out of the Capital Gains Tax liability on the rise in value of the house since 1999. Selling the house at a nominal value will not work as HMRC can simply substitute the market value for the sale proceeds. Recent changes in the tax rules mean that many of the schemes set up to avoid IHT on the family home no longer work - this may or may not be the case with you, but you need to get proper professional advice.
If your solicitor did not advise you of the Capital Gains implications in 1999 then he was professionally negligent. However, you need to check this very carefully before you take any action against him.

[themas]

Agree with kags - no way of avoiding CGT unless either you or your brother lived in the house as your only or main rersidence for any of tthe time you owned it. If you did, there is a reduction in the CGT but the rules are complex.

You (or your parents) might well have a negligence case against whoever gave the advice - provided they were definitely not given any advice about the CGT liability.

[chitchat]

Thanks for your answers - I have rung my dad and he is going to speak to his solicitor again.