Inheritance Tax planning - Overseas assets and gifting properties

1goal

Hi,

So we are doing some proactive tax planning and need some help from more knowledgeable people!

My FIL has a house here in the UK and some overseas property, which combined probably exceeds his allowance (maybe), which is £650k due to his spouses portion passing over.

We are looking at the most efficient way to look after this.

1) If he gifts the property us, I believe we would then be liable to CGT once we sell the UK property, which would be 28% x the whole value of the house?

2) If we bought it for £1, I believe that we would pay Stamp duty on the actual value of the house, but then would have to pay CGT on the value of the house -£1?

3) If he gifts the overseas portion (which we would never sell) we wouldnt incur CGT on this anyway if we dont sell, so presumably would never have to pay anything?

I just want to make sure that we minimise the tax bill, and I think option 3 safeguards us from this the most. Though there is a possibility that the combined value wouldnt exceed £650k in which case we wouldnt need to do anything.

Thanks

booksurr

everyone of your ideas is very wrong - if your FIL expects he is liable for IHT then he should pay for professional tax planning

is FIL liable for UK tax? if he is resident here then any overseas property will be taxed against him in the UK, the fact it is overseas will not alter that (expect of course it may also incur tax in whatever country it is depending on their tax law

1. FIL may be immediately liable to CGT himself if it is not his main home if he gifts it to you (or sells it to you for less than full market value). If it has been his main home but is not currently so then he will still be liable for CGT but may have some relief to ioffset it depending on the exact circumstances.
You would then also be liable for CGT yourself once you become the owner if you do not occupy it as your main home. If you do you won't.

CGT called capital gain for a reason - it is the difference between purchase cost and selling price.

2. stamp duty is paid on the cash changing hands not on the value of the property. The gain (for you) in this case would be your final selling price less the market value at the point of transfer from FIL minus the £1 paid. FIL may or may not (see 1 above) have had to pay CGT himself when he did the transfer at market value

3. you won't, FIL will if he is a tax resident of the UK since in that case it could not possibly be his main home so he would be liable for CGT at point of transfer. If he isn't then depends on local taxes but in that case if he is non resident in the UK 1 and 2 above are irrelevant. Patently if you are UK tax resident but never sell it of course you won't pay CGT