Gifting BTL property between husband & wife pre divorce

lunacoys

Good afternoon all, I'm just a little stuck & I wonder if someone could guide me here on capital gains tax liability -

My husband and I own 3 properties, one family home and 2 BTL. All mortgaged and will be transferred into my name as part of our breakup.

I paid all deposits and associated costs with the purchases and renovations, so we have determined between us there will be little money that I will pay him on the BTL properties and if it makes sense we will transfer these as a gift. The market value of these properties has increased over time and there is probably c £40k increase in value (not taking into account renovation costs, etc to determine equity).

Our family home has increased in value by about £25k too, but I've spent slightly more than this on renovating.

I think my questions are:
1. Is gifting the properties the right thing to do, for the BTL and family home?
2. Would there be any capital gains tax liability for him (I presume) & should we take purchase costs & renovation costs into account if we need to calculate a capital gain liability?
3. I will need to pay him something and is there a smart way of structuring this to reduce any tax liability i.e. put any payment against the family home?
4. Am I missing anything else fundamental?

On a slightly connected point, the BTL properties have a P&L loss against them currently having taken some renovation costs as revenue expenditure. Am I able to take all of this loss forward under my name in the future once the properties have been transferred, thus limiting tax payable on the net rental income in the future or do I lose half of this as part of the transfer?

Any guidance anyone could offer would be very very gratefully received. Thanks in advance.

antrobus

lunacoys wrote: »

...2. Would there be any capital gains tax liability for him (I presume) ...

any transfer of an asset between a husband and wife or between civil partners who are living together is treated by TCGA92/S58 as taking place for such consideration as will give neither a gain nor a loss to the transferor.

http://www.hmrc.gov.uk/manuals/cgmanual/cg22200.htm

But be advised that they do mean 'living togethere'.
http://www.hmrc.gov.uk/manuals/cgmanual/cg22202.htm

lunacoys wrote: »

...& should we take purchase costs & renovation costs into account if we need to calculate a capital gain liability?

Yes, for the purchase costs, but if you've already claimed the renovation costs as an expense against the rental income, you don't get a second bite at the cherry.

lunacoys wrote: »

....3. I will need to pay him something and is there a smart way of structuring this to reduce any tax liability i.e. put any payment against the family home? ....

If you need to borrow the money to finance a payment, borrowing the money against the BTL properties could be potentially 'tax-efficient'. Depends on the exact numbers.

lunacoys wrote: »

....
On a slightly connected point, the BTL properties have a P&L loss against them currently having taken some renovation costs as revenue expenditure. Am I able to take all of this loss forward under my name in the future once the properties have been transferred, thus limiting tax payable on the net rental income in the future or do I lose half of this as part of the transfer? .

Don't know.