I helped out my penniless brother – but will I be able to avoid CGT?

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I helped out my penniless brother – but will I be able to avoid CGT?

Question
I purchased a house for my bankrupt and penniless brother in law in June 2003. He was then 78 years old and is now 80 years old. I have paid all the bills relating to this house except the bills from the utilities.

When he dies am I exempt Capital Gains Tax on this property assuming the property has increased in value?

Arthur Says:

Unfortunately you are not exempt from Capital Gains Tax (CGT) when he dies.

If you would have put the property into trust when you purchased it, and then let your brother in law occupy it, you could have avoided any CGT when he died.

This shows the importance of advanced tax planning!

It may be worth your while now speaking to a tax consultant to see whether the application of the 'implied trust rules' are relevant to your situation.

In short the ‘implied trust rules’ are based on a situation where person A can own a property and person B lives in it. However in very special circumstances person A can get PPR despite there not being a trust in place.

As mentioned this only applies to very special circumstances and professional advice needs to be sought.

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