Gifting commercial property from mother to daughter

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    Gifting commercial property from mother to daughter

    Hi,

    I need help/advice on a London commercial property (fast food takeaway) that I currently own the freehold with my mother, this is currently let out to a tenant for 25 years. She would like to gift me her share of the property so I would fully own it, there will be no cash exchanged for this - will there be any capital gain tax rising from this transaction or will this just be liable for inheritance tax for the next 7 years?

    She had originally owned it since 1982 with my dad who has signed/transferred his share to me in 2011, he is no longer here for me to ask him for advice on what he had to do/pay when he signed it over to me.

    I plan to sell it within the next 3-5 years as I don't have the time or capacity to manage this anymore so I wanted to check if there is a big capital gains tax for the gift from my mum transferring or is it more tax efficient if we wait until I sell it?

    Thanks,
    Jay


    #2
    What is the approx l capital gains from 1982 to 2021 for the shop property ? What is her current income tax rate ? 20% or 40% ?

    Gifting of 50% shop property to daughter is still counted as a disposal which is liable for capital gains tax at 10% or 20% rate depending on her annual income after deducting the capital gains allowance of £12,300.

    If your mother proceeds with gifting , she pays capital gains tax now and clear of liability on iht after living beyond 7 years .

    If you sell after 5 years, your capital gain will be calculated on 50% interest from 2011 plus 50% interest from 2021.

    If you both sell in 5 years, your capital gain on 50% interest will be calculated from 2011 and your mother's capital gain on 50% interest will be calculated from 1982.

    Comment


      #3
      Transfer to you crystallises a CGT charge for your mother, based on the difference between the March 1982 value and today's value. (Don't forget that the value of half a property is less than 50% of the value of the property, as a minority interest is always less valuable than its relative proportion of the whole.)

      The big question is what is your mother's health like. If she's likely to die in the next maybe 2/3/4 years then you'd likely be better off selling after she is dead, rather than her transferring it to you.

      This is because if she transfers it and then she dies then there will be a double charge to tax - once to CGT and then again to IHT. Whereas death eliminates capital gains so saves you one of the tax charges.

      There is no SDLT on a gift UNLESS there is a mortgage on the property.

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