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Hi there

Just thought I'd give you an update (and ask for a little more advice ) re. the situation I posted on sometime ago.

At the time some good folk took the time and trouble to advise me to be sensible and cut my losses. At the time I wasn't in the right frame of mind to accept such good advice, but have since mellowed for all somewhat. The matter  continues to progress in the  County Court "in the Matter of the Trust of Land Act and Appointment of Trustees Act 1996". However my former business partner's solicitor has now said he wants to settle out of court - motivated no doubt by the pile of documentation I have submitted.

The offer I'm planning to make is that we each keep a flat each, with me getting the one that's got about three times as much equity in as the one he gets. This is a very generous offer in the circumstances, but I want some closure to the matter.

I'm wonder if there are any accountant types on here who can advise me of the tax implications of this. I will be 'giving' him my 50% share of a flat and he will be 'giving' me his 50% of the other flat. Is this a gift and liable for tax? Can we just give halves of property away or are we liable to be taxed on what we give as well a what we receive?  

Any guidance would be much apprecaited. And thanks to those who replied to the post originally - I did take on board what you said afterall!

Len

i cant help with the tax answer  (altho any accountant on here will not be able to give you definitive advice - and no one can give you any advice at all about figures without the purchase price, refurb costs and current value)

but i am glad this has reached a closure stage  -  best of luck 

Len,

glad to hear you have mellowed on this one, its very hard to make this sort of thing "business" and not "personal". I used to do some very hard core debt collection and even through it wasnt my money (I was working for somone else back then) I used to have our solicitor chiding me for throwing good money after bad in persuing people who had no likihood in repaying.

Anyway from a tax point of view you have already stuffed it up as you said earlier up the peice that you had been declaring 100% of the income in your name - if its 50:50 on the deeds then its 50:50 on your tax return unless you have a formal agreement ot the contrary to waive under the nose of the tax man. This will need attention in the first instance, and if you are in profit could of course mean tax back for you - and tax due by your 'friend'. Which of course being a good citizen you would of course let HMRC know about by writing to them with their name, address etc.  I imagine you might enjoy that bit......

From your point of view you are selling your half of one flat, and buying the second half of a flat you already own the first half of. The "consideration" that is to say the price of the transaction will no doubt be "interesting" but in essence its a CGT computation that is required on the sale. It wont just disappear due to it being a swap. They may or may not be CGT depending on what has happened to the price since aquisition and the capital value of works preformed. Whatever happens you will have to work it out properly, as will your 'friend'. Of course as your 'friend' lives in the one that is coming your way (that is to say their disposal) they might well have CGT too. Again you might like to make the tax man aware of this once you have declared your part of the transaction. Im sure you will again enjoy that too.

I hope that is of some help. If you are not represented from a tax point of view (and it sounds like you are not) you will find us acocuntants dont charge anywhere near as much as solicitors. If you drop me an email with the gory details in terms of numbers (purchase value, sales value, incomes declared to date etc) I can give you an indication of likely outcome in terms of tax/costs etc and see if its worthwhile presuing.

Regards,