How can I dispose of a property in a cheap tax efficient way?

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    How can I dispose of a property in a cheap tax efficient way?

    Hi,
    I'm a reluctant landlord as I have a share in a property with a family member. I want to sell the property, but my relative doesn't. My name are on the deeds. I don't want to start a legal dispute with my relative and I want to avoid a messy confrontation. The property has a very small mortgage on it, which I'm in a position to pay off.

    The property was joint bought over a decade ago as an investment. I now live miles away, am happily married and want to buy my first family home with my wife. Due to extra stamp duty, we're looking at around a £12k surcharge on our first home.

    I'm not sure the best thing to do here, whether it's possible for me to give the house away to my mum or say my daughter (toddler at the moment). Advice appreciated.

    Thanks




    #2
    If you give the property away, you will still have to pay CGT on the present market value of the property.

    Comment


      #3
      Set fire to it.

      No insurance payout, probably no value afterwards so no CGT to pay. Job done!

      My Dad, born 1903, was of the view that any decent citizen should pay taxes due without trying to wriggle out
      ​​​​​
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        Are you and your relative registered at Land Registry as joint tenants or as tenants in common ( 50% each ) ? Is your relative able to get a mortgage and buy the half share from you ?

        If you pay off the small mortgage , you could gift your 50% interest to your mother ( provided it does not push her total asset over £325K and you create a future IHT liability ) and she can received the 50% interest with no sdlt to pay.

        But there is liability to pay capital gains tax by the gifter . How much has the property price increased since it was purchased ?

        Comment


          #5
          Gordon,
          I've looked on the summary of title on the land registry and I'm listed as the only owner. The property has increased in price by around £100K since I bought it. At a push, my relative could probably get a small mortgage.

          Gifting the house to my mother would probably push her total assets above £325K (due to the family home being in a London suburb).

          Looking at HMRC's CGT calculator, I'm looking at around £14K CGT charge.

          Thanks for the advice, I'm looking for the most tax efficient thing to do here.

          Comment


            #6
            If you are the only name on the deeds, in what sense do you "share the property with a family member"?
            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

            Latest Activity

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            • Reversing gift
              by vik2001
              Is there a way of reversing a gift of a property given as joint tenants. I want to remove my name on a house that i share with my mother. Its our only main resendential property. I also want to avoid being caught by GROB...
              24-02-2020, 20:22 PM
            • Reply to Reversing gift
              by vik2001
              Ahh yeah got it. As the earlier gift fails does another 7 year PET start again if she buys the share back as cash....
              25-02-2020, 18:12 PM
            • Reply to Reversing gift
              by jpkeates
              Joint tenants don't own anything 50:50, they both own the entire property.
              So I don't think that the gift is part of the property.

              Tenants in common would be different.

              But this isn't something I am particularly confident about.
              25-02-2020, 18:03 PM
            • Reply to Reversing gift
              by AndrewDod
              The earlier gift from your Mom to you fails (as a PET from her) because you are giving it back .........
              25-02-2020, 17:53 PM
            • Reply to Reversing gift
              by vik2001
              Hi jp
              Why does the gift fail? As we have it as joint tenants 50/50. We wasnt trying to remove it from her whole estate.
              Hmrc site says if you gift part of property and all owners live together and share bills expenses then a market rent rate isnt required. So the gift hopefully should be...
              25-02-2020, 17:25 PM
            • Reply to Reversing gift
              by jpkeates
              The gift from your mother to you fails as a gift for tax purposes.
              The property hasn't left your mother's estate as far as I can tell.

              If you were to die, it would be a slight complication, but your executor should be able to sort it out (you might want to leave a note somewhere explaining...
              25-02-2020, 16:51 PM
            • Reply to Reversing gift
              by vik2001
              The property is worth 410k. It has been our only main resendential property. There is no mortgage.

              Was the transfer of the gift genuine. Because i read under s102b it needs to be a undivided share for my mother to live there else its a grob. Or being joint tenants it doesnt matter? Point...
              25-02-2020, 15:36 PM
            • Reply to Reversing gift
              by AndrewDod
              Well in that case

              a) CGT will not be payable on the reverse transfer providing the house has so far been your only home in the time you had a half

              b) SDLT will not be payable on the reverse transfer provided it is i) a gift transfer and no money changes hands AND ii) there...
              25-02-2020, 14:49 PM
            • Reply to Reversing gift
              by jpkeates
              How much is the property worth?...
              25-02-2020, 13:39 PM
            • Reply to Reversing gift
              by vik2001
              Not worried about sdlt. I just dont wish to have 2 properties. I also want to protect my mum if i was to pass away first....
              25-02-2020, 12:55 PM
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