CGT & Gifting

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    CGT & Gifting

    If I were to gift unencumbered properties to my adult children what would be their baseline for calculating CGT? Would it be zero (the price they paid) or would it be the price I paid or would it be based on market value when gifted? Or none of the above?

    #2
    It would be the market value on the date of transfer.
    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
      As JPKeates says - the value on the date of gifting. I would gather together some evidence of the value so you can back it up when you need to to HMRC.

      Comment


        #4
        Don't forget you need to declare the gift and pay the relevant tax within 30 days. So you need to supply that information now.

        Comment


          #5
          The Donor has liability for cgt after making the gift. The capital gain is calculated by the market value at July 2020 less price paid.

          The Donee has liability for cgt after selling the gift . The capital gain is calculated from the sale proceeds less the market value at July 2020 .

          Comment


            #6
            Thanks for the replies, all clear now.

            Comment


              #7
              I think you can reduce liability for CGT by deducting the costs of renovations,and costs associated with purchase eg survey fees,conveyancing fees etc.It may be possible to deduct legal fees resulting from the gift made

              Comment


                #8
                Originally posted by jpucng62 View Post
                As JPKeates says - the value on the date of gifting. I would gather together some evidence of the value so you can back it up when you need to to HMRC.
                Would it be acceptable to use the recent sale of an identical house innthe same road,rather than employ a surveyor,at some expense.

                Comment


                  #9
                  Originally posted by gnvqsos View Post
                  Would it be acceptable to use the recent sale of an identical house innthe same road,rather than employ a surveyor,at some expense.
                  I think that would be perfectly acceptable (although I am not a Tax Inspector!) - it is just about having some basis for your valuation.

                  Remember that if you value it low now you may save on CGT at the expense of the new owners & if you value it a bit high they will gain later.

                  Comment


                    #10
                    You're gifting a very expensive asset and, probably, going to pay quite a lot in tax.
                    I, personally, wouldn't be cutting any corners on the valuation.

                    I would also be speaking to a family solicitor to wrap the property into a trust, so your adult children can't do something you don't want them to do with 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


                      #11
                      Originally posted by jpkeates View Post
                      You're gifting a very expensive asset and, probably, going to pay quite a lot in tax.
                      I, personally, wouldn't be cutting any corners on the valuation.

                      I would also be speaking to a family solicitor to wrap the property into a trust, so your adult children can't do something you don't want them to do with the property.
                      Whilst this is sound advice I wouldn't touch a trust with a barge pole! Apart from the costs of solicitors (don't get me started on that) trusts can be complicated to manage, especially if you have no experience in this area, and can give rise to unexpected charges.

                      Whilst it is possible that your adult children may sell the property and spend it on fast cars or fast women (!) a gift is just that - a gift. The recipient should be free to do whatever they wish with it. If this is not your intent then don't give the asset away - a gift with strings is not really a gift at all.

                      Comment


                        #12
                        Originally posted by jpucng62 View Post
                        Whilst this is sound advice I wouldn't touch a trust with a barge pole! Apart from the costs of solicitors (don't get me started on that) trusts can be complicated to manage, especially if you have no experience in this area, and can give rise to unexpected charges.
                        I'm personally involved with three separate trusts as a trustee, and, other than the cost of set up, they're an absolute minimum of effort to manage.

                        One that relates to a rental property has to have an annual (zero activity) tax return, but the others are serving their purpose and have no work involved.

                        When they've served their purpose, other than notifying HMRC that the one they have registered has come to an end, they'll just be formally ended.

                        And the stuff my wife and I worked very hard to benefit our family will remain in the family.

                        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

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