Advice pls. on transferring house to married daughter

archieboy

Looking for any information, advice and any possible pitfalls in transferring ownership of our second home to our married daughter. Recently my daughter, son-in-law and children have been renting a second property owned by my wife and myself but we are now thinking about transferring ownership to my daughter.

We lived in this house for 7 years before renting it out as we couldn't sell it at the time. My daughter has only been renting it from us recently.

The house has almost doubled in value since we bought it in 2000.

Are there any tax implications for either of us if we go ahead and does anyone know approx. what costs would be involved?

FireWyrm

Sorry, just noticed you've had no response to this at all.

Yes, there will be tax implications such as capital gains and I'm pretty sure that there will be issues with 'deprivation of assets' if either one of you need to go into a nursing home (may not be an issue).

In short, most people on this forum are ill equipped to give you very much advice in this matter and you really shouldnt be relying on it anyway. I would engage the services of a property solicitor who will be able to walk you through the paperwork.

FYI, I did this with my parents house and it was pretty straight forward, but best get professional help.

cte1111

At the time of the transfer, CGT will be worked out on the difference between the purchase price and the current value of the property (less allowable costs such as solicitor's costs and capital expenditure).

In terms of CGT, the period in which you lived in the house will be tax free, as well as the last 3 years of ownership, plus the period that it was rented out. The rented out period will be limited to £40,000.

If the property is jointly owned, then the remaining capital gain can be split between the owners. Each person will then be able to use their CGT allowance, so in the end you may not have any tax to pay.

xylophone

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm
"However, if you give away a second home, Capital Gains Tax may be payable if the property has increased in value between when you first owned it and when you gave it away.
The person you give the home to may also have to pay Capital Gains Tax if they make a profit when they sell, give away or exchange - 'dispose of' - the home, unless it's their main home."

Don't forget IHT implications.

http://watson-esam.co.uk/Transfer_of_Property_by_Gift_Factsheet.html

archieboy

Thank you all for your replies. When we go ahead with this transfer we will go through a solicitor to get everything done legally.

Gehenna

I am 62 years old and I have a flat which is rented out to tenants, purchased for £90,000 and is now worth £300,000. I would like to transfer the flat into my daughter's name. I have spent around £25,000 on modernisation since originally purchasing it including extending the leasehold.

Would I have to pay CGT and how much would it be approximately?
Would my daughter have to pay CGT as she wouldnt be living in the flat, having her own house elsewhere or would she only have to pay CGT if she sells the flat?

I understand that all rent would be paid to my daughter after this transfer and she would have to pay the tax on the income.

tim123456789

Gehenna wrote: »

I am 62 years old and I have a flat which is rented out to tenants, purchased for £90,000 and is now worth £300,000. I would like to transfer the flat into my daughter's name. I have spent around £25,000 on modernisation since originally purchasing it including extending the leasehold.

Would I have to pay CGT and how much would it be approximately?
Would my daughter have to pay CGT as she wouldnt be living in the flat, having her own house elsewhere or would she only have to pay CGT if she sells the flat?

I understand that all rent would be paid to my daughter after this transfer and she would have to pay the tax on the income.

transferring the flat will trigger a CTG charge based upon full market value. How much tax you will have to pay depends upon whether the property has ever been your main home.

You daughter will only have to pay CGT if she sells based upon the starting point of todays value.

TBH doing this is a very bad tax planning, there are likely to be much better ways.

paddedjohn

Are you in good health? Why not just keep the flat in your name and let your daughter benefit from the rental income?