avoiding cgt on sale of house?

Question

Would any of the following methods work? do you have any other suggestions?

1.) Sell rooms separatly (staircasing) insuring that the profit from each room was too small to atract tax.

2.) Giving house away as gift & receiving gift from buyer.

3.) Doing cosmetic damage, selling the rights to the house above market value then undoing damage.

4.) sell house below cgt threshold on condition that buyer also purcheses fixtures & fittings at seperate extortionate cost.

5.) starting a sole trader estates agent (in britain there hardly regulated at all) and valuing your property below cgt level, selling at market value & taking rest under table

Answer 1

I can't really see any of those working.

1. If the rooms were self-contained flats then they could be sold at a rate of one a year. If not self-contained then who would want to buy? I think if there was an obligation for you to sell another room to the same buyer at a later date then it would probably be deemed to be a sale of both rooms with delayed consideration. Very tricky to set up correctly.

2. If the gift is to a connected person then tax would be payable anyway. Otherwise you run the risk of being defrauded and the Revenue might call the whole deal a sham and tax you accordingly.

3. Surely the market value of the damaged house will be the proper market value less the cost of reinstatement. Then it will cost you this anyway to put it right so no gain.

4. There are rules against this.

5. This is just plain illegal. It would work but you'd be lucky not to get caught.

Other ideas -

Sell a share in the house each year until the whole house is gone. Will cost you a bit in fees to set this up correctly.

Live in the house for a while. Then the last three years of ownership is exempt. Also as I presume you have been letting it the is an additional lettings relief which can shelter up to £40,000 of the gain.

Answer 2

If this is your primary residence cgt is not applicable on your house (yes i know there is a limit but if you are asking that question in a forum like this -- you are no where near the max!)

Ok I am a idiot I did not realize you were in the UK. I know nothing about taxes there other then they are high. Sorry! Hey at least we all hate the french!

Answer 3

Keep it simple - if you live there as your 'principle private residence' no tax anyway.

If you don't :

1 = tax evasion = HMRC can deem it to be one sale
2 = tax evasion = HMRC can link transactions
3 = tax evasion = no commercial reason for series of transactions
4 = tax evasion = as 3
5 = tax evasion

Punishable by prison sentence - will leave you to work it out!

Answer 4

I`d go for no 4. Have you seen a financial adviser? Would be worth the money.