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  • FIRST POST
    • franskiel
    • By franskiel 20th Sep 16, 7:18 PM
    • 4Posts
    • 0Thanks
    franskiel
    Transferring Property as a Gift to Nephew
    • #1
    • 20th Sep 16, 7:18 PM
    Transferring Property as a Gift to Nephew 20th Sep 16 at 7:18 PM
    Hi there,

    I am a foreign citizen, with a property in the UK (England). The mortgage has recently been paid off and I am now hoping to give the property to my sister's son as a 'gift'.

    What is the best way to go about this? And how is the transfer affected by my being a non-UK/EU citizen?

    According to the Stamp duty govt website I should not have to pay any stamp duty if there is no mortgage. (am not allowed to post links as a new user)
    Are there any other taxes that will have to be paid?
    Further, how will this transfer affect any HMRC fees if my nephew wishes to sell the property in the near future?
    The house was initially purchased in 1996.

    Thanks for your help. I am pretty clueless when it comes to these matters.

    Thanks!!
Page 1
    • G_M
    • By G_M 20th Sep 16, 7:35 PM
    • 35,993 Posts
    • 39,348 Thanks
    G_M
    • #2
    • 20th Sep 16, 7:35 PM
    • #2
    • 20th Sep 16, 7:35 PM
    Complete these forms and send to the Land Registry. Note the requirement to prove ID:

    * TR1
    * AP1
    * ID1

    See:
    https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1

    I don't see that your nationality or residnecy is an issue.

    If there is no monetary value (ie nephew pays you nothing) there is no SDLT to pay.

    As a gift, it might be relevant to Inheritance Tax liability if you die within 7 years - though as non-UK citizen I don't know if your Estate would be liable to IHT. You'd need tax/Estate planning advice.

    If nephew later sells, the fact he received the property as a gift will make no difference.
    • Keep pedalling
    • By Keep pedalling 20th Sep 16, 10:03 PM
    • 1,953 Posts
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    Keep pedalling
    • #3
    • 20th Sep 16, 10:03 PM
    • #3
    • 20th Sep 16, 10:03 PM
    Unless this is an area of the UK where property values have stagnated over the last 10 years, then capital gains tax may be an issue.

    https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property
    • G_M
    • By G_M 20th Sep 16, 10:08 PM
    • 35,993 Posts
    • 39,348 Thanks
    G_M
    • #4
    • 20th Sep 16, 10:08 PM
    • #4
    • 20th Sep 16, 10:08 PM
    Unless this is an area of the UK where property values have stagnated over the last 10 years, then capital gains tax may be an issue.

    https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property
    Originally posted by Keep pedalling
    Good point, though it's not clear what the property has been used for till now.
    • getmore4less
    • By getmore4less 20th Sep 16, 10:53 PM
    • 25,613 Posts
    • 15,489 Thanks
    getmore4less
    • #5
    • 20th Sep 16, 10:53 PM
    • #5
    • 20th Sep 16, 10:53 PM
    residence and domicile can impact the tax situation.
    • franskiel
    • By franskiel 20th Sep 16, 10:56 PM
    • 4 Posts
    • 0 Thanks
    franskiel
    • #6
    • 20th Sep 16, 10:56 PM
    • #6
    • 20th Sep 16, 10:56 PM
    Seems quite straight forward!

    thanks a lot
    • franskiel
    • By franskiel 20th Sep 16, 10:58 PM
    • 4 Posts
    • 0 Thanks
    franskiel
    • #7
    • 20th Sep 16, 10:58 PM
    • #7
    • 20th Sep 16, 10:58 PM
    The property is a house which at the moment is being rented out. Does this mean that tax will inevitably have to be paid?
    • Keep pedalling
    • By Keep pedalling 20th Sep 16, 11:25 PM
    • 1,953 Posts
    • 2,059 Thanks
    Keep pedalling
    • #8
    • 20th Sep 16, 11:25 PM
    • #8
    • 20th Sep 16, 11:25 PM
    The property is a house which at the moment is being rented out. Does this mean that tax will inevitably have to be paid?
    Originally posted by franskiel
    No, that depends on a number of factors. Have you ever lived in your UK house? If so how long for?
    • booksurr
    • By booksurr 21st Sep 16, 12:33 AM
    • 2,909 Posts
    • 3,340 Thanks
    booksurr
    • #9
    • 21st Sep 16, 12:33 AM
    • #9
    • 21st Sep 16, 12:33 AM
    Seems quite straight forward!
    Originally posted by franskiel
    the transfer is straightforward, but your tax position is not !

    1. when did you cease to reside in the UK?
    Your EC citizenship means you are a "non domiciled" person and so are subject to special rules in respect of Capital Gains Tax if you are no longer physically living in the UK

    2. a non dom is liable to CGT on the gain made since 5th April 2015. You are exempt on the gain made before that date assuming you no longer live in the UK

    3. as a non dom you must report the sale to HMRC within 30 days of giving it to your nephew.

    4. as he is your nephew you are "connected persons" so although no money changes hands, for CGT purposes the gain is worked out on the difference in market value between what it was worth on 5th April 2015 and what is was worth on the day you gave it way. You may need professional help in working out the 2015 value if you did not get one done at that time (many non doms did as they knew the rule was changing at that time)

    5. were you living in the property after 5th April 2015 or was it already let by then? Have you ever lived in the property between 1996 - April 2015?

    6. you can claim your CGT allowance, and depending on answers to Q5 you may also be able to claim other relief as well, so you may actually not have any tax to pay, but you must still report it

    read: https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property
    Last edited by booksurr; 22-09-2016 at 9:41 PM.
    • Savage95
    • By Savage95 22nd Sep 16, 9:40 PM
    • 3 Posts
    • 0 Thanks
    Savage95
    Similar situation (I think!)
    Can anyone help? I believe my mother is in a similar position; she owns two properties, the one she resides in and another which my sister lives in. My sister does not pay rent to our mother ( or rather has not paid any rent since 2013). She is really unhappy where she lives (i.e. the location of this second house) and we are trying to persuade our mother to sell this second house in order that my sister can move to a more desirable area and particularly nearer to her daughter, but our mother doesn't want (as most people!) to pay the government what I assume would be Capital Gains Tax. Is there any way around this legally that I can explain to our mother as my sister is now getting highly stressed in her current situation? Thank you everyone
    • booksurr
    • By booksurr 22nd Sep 16, 9:48 PM
    • 2,909 Posts
    • 3,340 Thanks
    booksurr
    Can anyone help? I believe my mother is in a similar position; she owns two properties, the one she resides in and another which my sister lives in. My sister does not pay rent to our mother ( or rather has not paid any rent since 2013). She is really unhappy where she lives (i.e. the location of this second house) and we are trying to persuade our mother to sell this second house in order that my sister can move to a more desirable area and particularly nearer to her daughter, but our mother doesn't want (as most people!) to pay the government what I assume would be Capital Gains Tax. Is there any way around this legally that I can explain to our mother as my sister is now getting highly stressed in her current situation? Thank you everyone
    Originally posted by Savage95
    your sister is a grown adult with children of her own?

    is your mother keeping her imprisoned in the property? I cannot see any connection between sister's inability to make her own decisions and lead her own life, and your mother's ownership of a property which she does not wish to sell (at the moment)

    if your sister does not have the money to rent/buy a place of her own can you help her?

    you are not going to find a legal solution to making your mother sell her property. Has there been a family breakdown meaning you cannot talk to her?
    Last edited by booksurr; 22-09-2016 at 9:53 PM.
    • Savage95
    • By Savage95 22nd Sep 16, 9:56 PM
    • 3 Posts
    • 0 Thanks
    Savage95
    Sorry I maybe misled the situation. My sisters not imprisoned but has no savings to speak of and the only way she would be able to get out would be with mothers assistance by her sale of the house. I'm not in a position to assist as I have a mortgage of my own! I'm not trying to make my mother sell the property but I think she would be happy and willing to help my sister if she knew she wasn't going to have to pay a load of money to the government which she feels she shouldn't have to. That was the main question; does she have to pay CGT? And if so, what sort of figure would it be?
    • G_M
    • By G_M 22nd Sep 16, 10:01 PM
    • 35,993 Posts
    • 39,348 Thanks
    G_M
    Can anyone help? I believe my mother is in a similar position; she owns two properties, the one she resides in and another which my sister lives in. My sister does not pay rent to our mother ( or rather has not paid any rent since 2013). She is really unhappy where she lives (i.e. the location of this second house) and we are trying to persuade our mother to sell this second house in order that my sister can move to a more desirable area and particularly nearer to her daughter, but our mother doesn't want (as most people!) to pay the government what I assume would be Capital Gains Tax. Is there any way around this legally that I can explain to our mother as my sister is now getting highly stressed in her current situation? Thank you everyone
    Originally posted by Savage95
    whether your mother slls the property today, or tomorrow, she will hve to pay Capital Gains Tax as the property is not her primary residence.

    So she should make her decision based on whether she wants to keep the property (investment? home for sister/someone else?), or sell and do something ese with the cash.

    The only alternative is to keep it till death - CGT is not payable on death (though Inheritance tax may be).
    • Savage95
    • By Savage95 22nd Sep 16, 10:10 PM
    • 3 Posts
    • 0 Thanks
    Savage95
    Thank you. Excuse my ignorance (I'm grateful for your straightforward typing as I have no idea on this subject) but if the house was worth around £300,000 do you have any inkling as to what my mother would likely pay in CGT and would it be payable after sale or pre sale i.e. could the CGT be paid from the money of the sale?
    • Pixie5740
    • By Pixie5740 22nd Sep 16, 10:14 PM
    • 8,398 Posts
    • 11,006 Thanks
    Pixie5740
    Capital Gains Tax the clue is in the name. Tax is based on the gain so only saying that the property is worth £300k isn't enough information for anyone to estimate the tax for you.

    Edit:

    Here's a link to a thread that includes a sample CGT calculation.

    http://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6
    Last edited by Pixie5740; 22-09-2016 at 10:16 PM.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Pixie5740
    • By Pixie5740 22nd Sep 16, 10:18 PM
    • 8,398 Posts
    • 11,006 Thanks
    Pixie5740
    Usually the largest outgoing a person has is there rent or mortgage. If your sister is paying neither then surely she should be quids-in and therefore able to save something.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • xylophone
    • By xylophone 23rd Sep 16, 12:22 AM
    • 18,452 Posts
    • 10,382 Thanks
    xylophone
    Try this https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/properties/
    • deannatrois
    • By deannatrois 23rd Sep 16, 2:41 AM
    • 4,202 Posts
    • 5,874 Thanks
    deannatrois
    I'm sorry but I'm having problems believing what I am reading.

    Your mother has been allowing your sister to live rent free in a £300k house for some years. Does no one see anything wrong in expecting your mother to sell the house and incur a tax bill when she doesn't seem to particularly want to sell the house?

    I assume if your mother sells the house, you are thinking your sister will then be seen as homeless and given housing by the council. If so, it may not be as easy as that. You are ignoring the fact that your sister may have to live in bed and breakfast while waiting for permanent housing to come up.., she will have to take what's offered (homeless people often only get one offer). I don't know if your sister wants to move to a different part of the country to where she is living now - other councils won't accept responsibility for her normally.
    • xylophone
    • By xylophone 23rd Sep 16, 10:07 AM
    • 18,452 Posts
    • 10,382 Thanks
    xylophone
    I assume if your mother sells the house, you are thinking your sister will then be seen as homeless and given housing by the council.
    I thought the idea would be that either mother would lend the daughter the cash from the sale to buy a property in a favoured area or would buy a house in a favoured area and allow her daughter to occupy it.

    If option one, then mother would not only be paying CGT but also the additional SDLT for buying a property in addition to her own PPR.
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