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  • Tax

    Transferring ownership and CGT

    We are believers in giving to our children whilst we are still alive so we can enjoy seeing them benefit from it rather than waiting until we are pushing up daisies.

    We are interested in any advice from the forum about how to transfer ownership of one of our houses, which our daughter currently rents from us, to her. What evidence does HMRC require as to the value of the house so it can calculate CGT? A valuation from a local estate agent or surveyor? We bought the property for 114K in 2004. It’s now worth aprox 180-200K. We understand we would first pay off our mortgage which we are able to do. She wants to stay living in it - not rent it out.

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    You should consider transfer to a trust with your daughter as beneficiary. 

    There should be no CGT and no stamp duty if done correctly.
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    This type of trust would be managed by the settlor (person giving the property away) and they will also be trustees. 

    The asset is property not sticks and shares and as there won’t be any rents no trust tax charges would be triggered.

    I suspect the trust you’re referring to are investment trusts.
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    thanks.  presumably this would NOT be the case for giving away (by trust) rent producing rental properties?  

    i.e would this avoid sdlt, ongoing big fees and postpone cgt etc?

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    We have used trusts to give away rent producing properties.

    You have to be careful as trusts pay 45% tax on rents so the beneficiaries need to be lower rate Tax payers so that they can reclaim.

    Suits school fees planning by grand parents (grandchildren of any age) and university fees planning for your children as they are over 18.

    Getting into the detail is worth looking at as there are always pros and cons. 

    The original query was to transfer a non income producing asset to an adult child to defer CGT.
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    Well this was the other route that we were thinking of. Have I got it right in thinking that she would then take on any CGT liability instead of us?

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    Downside of no PPR relief for daughter going forward though.

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    Correct.

    Private residence relief is denied where the residence was acquired under a hold-over election.

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    Hi, do you have info or links covering trusts as I am interested.
    Thanks
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