Property Gift

Woo's_Dad

10 years ago when my daughter got married, she and her new husband could not afford to buy property and rental in her town was extremely expensive. I purchased a property myself and the couple have been living in that property rent free since then.
The property has not risen appreciably in price since the purchase and is not mortgaged.
I would like now to secure my daughter's future by making over the property formally to her and her husband. I understand I can re register this with the Land Registry for a fee, that as the property is not mortgaged no SDLT will be due, that CGT is unlikely to be payable as there has not been any appreciation in the 10 years I have owned the property, but am not clear on the position regarding income tax from my daughter's perspective. Would such an ownership transfer be seen as a gift for income tax purposes or would there be any other tax liability to my daughter or myself?

antrobus

Woo's_Dad wrote: »

Would such an ownership transfer be seen as a gift for income tax purposes or would there be any other tax liability to my daughter or myself?

There is no such thing as a gift for income tax purposes.

If you die within seven years, some or all of the value would be added to your estate for IHT.

Woo's_Dad

Thanks for reply antrobus.

What I mean by gift for income tax purposes is that, I beleive, a person can receive a cash gift of up to £3000 in any tax year without declaring that as income. If a house were to be "given" by transferring to my daughter, would she need to declare that as a "gift" and be liable to pay income tax on the value of that "gift" or would IHT in the event of my death before 7 years be the only tax liability?

da_rule

IHT (and CGT and SDLT) would be the only liability.

A gift is not income for the purposes of income tax.

davidmcn

Woo's_Dad wrote: »

What I mean by gift for income tax purposes is that, I beleive, a person can receive a cash gift of up to £3000 in any tax year without declaring that as income.

You've got this mixed up with the Inheritance Tax rules. Gifts, of any amount, don't fall into the definition of "income" for Income Tax purposes.

G_M

1) Capital Gains Tax. If the increase in value exceeds the allowance for the year of the transfer.

2) Income Tax. Not applicable to a gift.

3) Inheritance Tax.

a) If you die within 7 years of making the gift, the vaue of the gift is included in your Estate (pro rata for years 4 - 7)

b) a gift of up to £3000 can be made each year and not fall within a) above. However I suspect your property will exceed that amount!

4) Deprivation of Assets. If you were to go into a care home and seek Local Authority funding, the LA migh consider the gift a deliberate DofA to reduce your assets to below the threshold for LA support.

For the property transfer, you need

* TR1
* AP1
* ID1

See
https://www.gov.uk/government/publications/registered-titles-whole-transfer-tr1/guidance-completing-form-tr1-for-the-transfer-of-registered-property