Transfer part ownership to daughter

pleasedelete

Do you have a mortgage on it?

Does she actually want this or is it to save you money? If it is to help her you may be better giving her money to put in a help to buy isa as it will get topped up when she wants to buy.

POPPYOSCAR

pathtofreedom wrote: »

Does she ever plan to buy her own place one day? As she'll be liable for the new second home stamp duty if you do this. Also if she ever gets married and divorced and you're still living there that could get complicated.

Possibly, but unless she wins the lottery I cannot see that happening for a good few years and as I said we intend to transfer £20,000 share to her each year.


Then when she needs a house she can move in or sell it.


It is not our home, as I said, it is a rental property.

POPPYOSCAR

pleasedelete wrote: »

Do you have a mortgage on it?

Does she actually want this or is it to save you money? If it is to help her you may be better giving her money to put in a help to buy isa as it will get topped up when she wants to buy.

Only a small mortgage which will be redeemed.


It is to help her and save us CGT as if we gift it to her completely we will have to pay CGT.

kinger101

POPPYOSCAR wrote: »

Yes thank you.


Do you have experience of this? Do we work out the value of the property and gift what % the CGT allowance is of that value?

Not of this. In theory, what you suggest sounds right, but the risk is that in the absence of an independent valuation, the HMRC might challenge your valuation. It might just be a matter of erring on the side of caution. But you could always post on the tax forum to see if anyone has a better answer.

POPPYOSCAR

kinger101 wrote: »

Not of this. In theory, what you suggest sounds right, but the risk is that in the absence of an independent valuation, the HMRC might challenge your valuation. It might just be a matter of erring on the side of caution. But you could always post on the tax forum to see if anyone has a better answer.

We were thinking of getting a valuation from a chartered surveyor who deals with valuations of this nature.


(The valuation from the Bank for LTV purposes is £100,000 lower than the estate agent which makes no sense.)

gingercordial

POPPYOSCAR wrote: »

Yes thank you.


Do you have experience of this? Do we work out the value of the property and gift what % the CGT allowance is of that value?

It isn't that easy. HMRC will want to look at this as the value lost to you. I'll try to explain, bearing in mind it's 1am...

What you're saying is that you would get a market valuation, say £100,000, and give her 10% of the house which would be worth £10,000.

What HMRC will say is that you own 90% of a house. What is that worth on the open market? If you had to advertise with an estate agent for some random stranger to come and buy your remaining 90%, what would you be able to sell it for? Probably not £90,000 because no stranger would be willing to come along and pay full market price for a house that someone else owns part of and so they can't do what they like with it. Perhaps you could get someone to take that off your hands for £60,000.

That means the value you've given away is really £40,000 and that is what they would argue should be the disposal for CGT.

The other danger is that if you try to do this in small chunks every year they could be considered linked transactions and effectively all one big disposal in year 1, taking you over your allowance.

Whether there's any tax to pay will of course depend on whether you do or have lived in the property to claim PPR etc.

pathtofreedom

POPPYOSCAR wrote: »

It is not our home, as I said, it is a rental property.

If you're renting it out, she'll have to declare her share of the income on her tax returns I think, and would probably need to understand her liabilities as a landlord if something happens to you two, as her responsibility for the tenants, even if she is more of a silent partner in the business to start with.

Is she your only child? As if god forbid something did happen, that's a lot of things to sort out while dealing with her loss.

POPPYOSCAR

pathtofreedom wrote: »

If you're renting it out, she'll have to declare her share of the income on her tax returns I think, and would probably need to understand her liabilities as a landlord if something happens to you two, as her responsibility for the tenants, even if she is more of a silent partner in the business to start with.

Is she your only child? As if god forbid something did happen, that's a lot of things to sort out while dealing with her loss.

Yes she would get a % share of the rent which she would declare as we do but would only be about £300 pa.


She is thinking about living there soon anyway.


No she is not an only child but the only one without a property.
The others are benefiting in other ways and all being treated equally.There are also other family members who would help her assuming we all do not get on the same plane together and it crashes!

POPPYOSCAR

gingercordial wrote: »

It isn't that easy. HMRC will want to look at this as the value lost to you. I'll try to explain, bearing in mind it's 1am...

What you're saying is that you would get a market valuation, say £100,000, and give her 10% of the house which would be worth £10,000.

What HMRC will say is that you own 90% of a house. What is that worth on the open market? If you had to advertise with an estate agent for some random stranger to come and buy your remaining 90%, what would you be able to sell it for? Probably not £90,000 because no stranger would be willing to come along and pay full market price for a house that someone else owns part of and so they can't do what they like with it. Perhaps you could get someone to take that off your hands for £60,000.

That means the value you've given away is really £40,000 and that is what they would argue should be the disposal for CGT.

The other danger is that if you try to do this in small chunks every year they could be considered linked transactions and effectively all one big disposal in year 1, taking you over your allowance.

Whether there's any tax to pay will of course depend on whether you do or have lived in the property to claim PPR etc.

But how can they ascertain the value of what you have given away without knowing what someone would pay in those circumstances?


What about an unmarried couple putting a house in one name to both names? Presumably they would also face this problem?


We have owned it for 25 years and lived in it for the first 10 years.

gingercordial

POPPYOSCAR wrote: »

But how can they ascertain the value of what you have given away without knowing what someone would pay in those circumstances?

They have a valuations department to deal with this sort of thing. Happens a lot with parents trying to give away shares in the family business.

What about an unmarried couple putting a house in one name to both names? Presumably they would also face this problem?

Yes, if they haven't lived there to get PPR.

We have owned it for 25 years and lived in it for the first 10 years.

In that case some of the gain will be exempt, you'd need to do a proper calculation and see what gain you'd come up with.