capital gains tax

UNCLE_BUCK

Hi all,

what are my options please, i want to gift my daughter my house.?
can i pay less cgt and how is the cgt worked out??/
many thanks

CLAPTON

perhaps some details would help

is this house your only property
do you live in it
if so will you continue to live in it after giving it to your daughter
will she live in it

why do you want to give it to her?
what's your total estate worth including the house approximately?

UNCLE_BUCK

CLAPTON wrote: »

perhaps some details would help

is this house your only property
do you live in it
if so will you continue to live in it after giving it to your daughter
will she live in it

why do you want to give it to her?
what's your total estate worth including the house approximately?

Hi clapton thanks for responding,

Yes this is my only property
yes i do live there
yes i will continue to live there.
no she has her own house.
yes i will live there until.. well you know!
the reason for the gift is.. my wife of 10 years has a family from another marrage, i do not want my assets to transfer to her then her family, it is my house and want my daughter to recieve it.
it is worth approx 350k

CLAPTON

you can give the property to your daughter and the is no CGT or tax as its your principle residence

however, if you continue to live there without paying a commercial rent then your estate will be liable for IHT as it will be viewed as a gift with reservation

your daughter will be liable to pay CGT when it is sold (potentially as well as IHT)

presumably you have considered what will happen to your wife should
you die before her

and if you want to move (i.e. sell the house and buy another) your daughter will have to pay CGT

and if she should predecess you the house will become her husbands

should you need to enter a care home the council may consider that you deliberately deprived yourself of asssets and try to recover money from the house.

lots of things to think about.

noh

Other disadvantges are :-
your daughter could divorce and therefore half the house could go to her ex husband.
Your daughter could become bankrupt or incur large debts requiring the house to be sold.

By far the safest way is to write an appropriate will to acheive your aims and keep it updated if your circumstances change.

00ec25

CLAPTON wrote: »

you can give the property to your daughter and the is no CGT or tax as its your principle residence

you will have to pay Stamp Duty on the market value of the house at the time of the gift. This applies because you are giving at below market value (ie free) to a related person

as the others say, write a will and all this is avoided

UNCLE_BUCK

thanks for the replies, can i assume then that a will would or could not be contested and that my wife could not state i have lived their for x amount of years helped maintain it and as the next of kin it should pass to me???

dzug1

UNCLE_BUCK wrote: »

thanks for the replies, can i assume then that a will would or could not be contested and that my wife could not state i have lived their for x amount of years helped maintain it and as the next of kin it should pass to me???

If your wife is dependent on you (and even if she's not, but it's less likely to succeed) she can apply to the court for reasonable provision from your estate. That might include all or part of the house or the right to occupy it indefinitely.

zzzLazyDaisy

I agree, the complications of gifting the house mean that a will is almost certainly the best way to deal with this, but you need to seek legal advice.

It is possible to leave the house to your daughter in your will, with your wife having a lifetime right to live in the house (if that is what you want).

Whatever you decide to do, you must make it clear in the will that you have considered your wife before making this provision. Presumably your wife you are not cutting your wife out of your will, so there may be other provisions for her such as savings, pension etc? What about the contents of the house?

If your wife is financially dependent on you and you leave her without anywhere to live and no means of support then yes, she can contest the will.

Even if this might be a problem - it doesn't have to be all or nothing - you could leave the house to them equally, so your wife can buy something smaller, and your daughter get the balance.

Another thing - you are under no obligation to tell anyone what is in your will. It is your business and you can always change it in the future if your circumstances change.

If you do the deed now, it could make for bad feeling between your wife and daughter, and you can't reverse the decision if something changes later.

Get legal advice, it will be worth it for the peace of mind.

Natasha20

dzug1 wrote: »

If your wife is dependent on you (and even if she's not, but it's less likely to succeed) she can apply to the court for reasonable provision from your estate. That might include all or part of the house or the right to occupy it indefinitely.

As previously advised, you should get a suitable will drawn up. Your situation is very common and best way around it would be for your will to allow you wife to live in the house until she dies or remarries or doesn't wish to live there any more and then the house would pass to your daughter.