transfer title or deed of trust regarding CGT reduction

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    transfer title or deed of trust regarding CGT reduction

    Hi All
    I am selling a BTL which is currently in my name only. In order to reduce the CGT would I need to transfer the title to include my wife or would a deed of trust suffice?

    #2
    You can't change the CGT position retrospectively.

    And you would need some kind of joint ownership to use a deed.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      You would need to transfer the property into joint name in the year before sale in order for your wife to claim the capital gains free allowance of £11,700 on her share of the property .

      Comment


        #4
        Thanks jpkeates and gordon999 for your reply. I think I need to go back to my accountant and solicitor because I am sure they said a DOT would be sufficient. I am looking at complete and exchange after 6th april 2019. Gordon999 when you said a year before sale, is that a calendar year or tax year.

        Comment


          #5
          It doesn't really matter though, because it's not possible to make any change retrospective.
          Any change of ownership will only have an effect from the day it becomes effective (plus some time to notify HMRC) so the effect on the tax due would be negligible.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Neilm.

            I was referring to tax year . So my suggestion is " do a% transfer to your wife this month and send the Form 17 asap to Tax Office to enter on their 2018-2019 records ".

            Then you would "exchange sale contracts " after 6th April 2019 and you and your wife will have to report the sale and claim the capital gain allowance in the tax return for 2019-2020 ( after 6 April 2020 ).

            Comment


              #7
              Hi Gordon999 and jpkeates,
              Gordon your suggestion is what I was hoping to do, do the paperwork in next couple of weeks and exchange sale contracts after 6th april. I thought form 17 only applies to joint ownership? jpkeates when you say retrospective, do you mean retrospective from day of purchase or retrospective in terms of not possible after the sale of the property?

              Comment


                #8
                Form 17 is how you advise HMRC of a change of beneficial ownership.
                If your intention is to transfer part ownership to your wife, it will be a joint ownership from the point of transfer and the beneficial ownership will also change from that point.

                It's half way through February and, even if the transfer of ownership was done very quickly, it would only allow you to transfer the liability for the tax on any gain in the next month or so.
                All of the gain to the point of transfer will be in your name as you owned the all of the property during that period.
                That's my point about retrospection - will there be any meaningfull gain in the next 7 or 8 weeks?
                Because a portion of that is all you can transfer to your wife.

                If you have a buyer and have started the sale process, they're going to be a bit hacked off if you change the ownership of the property title now.

                If the property has a mortgage, the transfer isn't a gift (so sdlt might be due) and the lender may not allow the change.

                If you do change the beneficial ownership, don't forget to formally notify any tenant in the property.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  The transfer of property between spouse is subject to special conditions as stated in :

                  https://www.gov.uk/capital-gains-tax/gifts

                  The capital gain for the transferred property to spouse is calculated from the original date of first purchase.

                  Comment


                    #10
                    Live and learn.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      I am no expert - but I think that if HMRC believe you have transferred the property to avoid CGT they can charge the full amount anyway. HMRC always want their pound of flesh.

                      Comment


                        #12
                        Originally posted by Gordon999 View Post
                        You would need to transfer the property into joint name in the year before sale in order for your wife to claim the capital gains free allowance of £11,700 on her share of the property .
                        A Deed of Trust is perfectly sufficient. It confers beneficial ownership - the "joint names" only has to do with legal ownership which is irrelevant in and of itself to CGT. As above it cannot be retrospective, and in terms of transfer to a spouse, the baseline value is backdated and back-valued to the acquisition by the spouse. All you will achieve is an extra 11K allowance, which will save at most £3000 in tax. You can also transfer to joint names, which in the absence of a separate DOT would achieve a similar goal.

                        There is no stipulation that it has to be a year before.

                        Comment


                          #13
                          Originally posted by jpucng62 View Post
                          I am no expert - but I think that if HMRC believe you have transferred the property to avoid CGT they can charge the full amount anyway. HMRC always want their pound of flesh.
                          Not correct. It is perfectly permissible (and routine) to transfer value precisely to reduce CGT.

                          Comment


                            #14
                            Originally posted by AndrewDod View Post

                            A Deed of Trust is perfectly sufficient. It confers beneficial ownership - the "joint names" only has to do with legal ownership which is irrelevant in and of itself to CGT. As above it cannot be retrospective, and in terms of transfer to a spouse, the baseline value is backdated and back-valued to the acquisition by the spouse. All you will achieve is an extra 11K allowance, which will save at most £3000 in tax. You can also transfer to joint names, which in the absence of a separate DOT would achieve a similar goal.

                            There is no stipulation that it has to be a year before.
                            A Deed of Trust may be sufficient for you and your solicitor.

                            But it seems a single name in the property title + DOT is not enough to satisfy HMRC under " their rules ".

                            HMRC want to see both spouses names registered on the property title before they accept a DOT to vary the distribution of rental profit. .

                            Comment


                              #15
                              Gordon999. Sorry, I am on my phone and struggling to copy and paste from your post above. But where is your source please to say that HMRC want to see both spouses' names on the title before they will accept a DoT which varies the distribution of rental income? I can't see anything which says this in the official HMRC guidance I have been reading (see link below):

                              https://www.gov.uk/hmrc-internal-man...anual/tsem9520

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