Will there be a flat fee?

By THIS IS MONEY
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MY SON and I own a flat as joint tenants in London worth £220,000 and he lives in the flat. He paid £100,000, which my husband gave him as a gift. I took a mortgage for £100,000 and although my son contributes one-third of the monthly payment. The mortgage payments go out of my account. If we sell the flat will I have to pay Capital Gains Tax (CGT) as it is my second home? If I transfer my share to my son now will I be liable to CGT if he sells the property within a certain period? PW, Middlesbrough.

Maurice Fitzpatrick, a tax director at Tenon says: For Capital Gains Tax purposes both you and your son are the beneficial owners of half of the flat and as it is not your principal private residence and you get half the proceeds of any sale, you'll be liable to Capital Gains Tax on half of the gain. If you say you paid £200,000 and it is now worth £220,000 the total gain if sold now would be £20,000, of which your share would be £10,000.

Once stamp duty and agents' costs are deducted that will leave very little on which CGT could be charged especially as all of us have an annual Capital Gains Tax exemption of £7,500 so it is unlikely that you'll be liable to pay much CGT.

From the tax point of view if you transfer your share to your son, the transfer will be based on the market value of the property but it may not be worth it bearing in mind that even if you do not do this, if your figures are correct you will have little CGT to pay anyway. What your son does with the flat afterwards will not affect your tax position.

However, this question sounds as if it could be quite complicated, so if in doubt get professional legal and tax advice.

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