capital gains and gifting share to spouse

jonny_c

Would HMRC take a dim view if my sister and I both gifted half our share in our inherited second property to our spouses creating 4 tenants in common and 4 CGT exemptions shortly before selling the property.

booksurr

there are accountants on here who have reported instances where HMRC regard that as an action done purely to avoid tax so they invoke the general anti avoidance legislation and seek to set aside the transfer

there are accountants on here who successfully fought against such HMRC pushiness and won. If you do that it is a gamble, no one can say if it is a big or small gamble on you being spotted doing it.

How long ago was the inheritance? If less than 2 years a common tactic is to go back to the inheritance and apply a deed of variation so the spouse inherited it directly thereby evading the need to transfer it just before sale. Of course if, in the meantime, it has been let and you have been taking rental income , making spouse a retrospective owner would introduce more complications than it is probably worth just chancing the CGT challenge

the bottom line is take professional advice so you can sue someone if HMRC come after you. A transfer should really be done as far before the sale as you can, certainly before you start to market the property, and ideally, (if let) far enough in advance that any income tax on the rent (if let obviously) is paid under the new arrangements before the property is sold so there is no direct link between selling and saving CGT.