Passing on property to brother, would he need to pay any tax?

steveburns

I have a property that I would like to pass on to my sibling. It is the only house in my name, but I do not live in the area and would like to buy in a new place. The house is paid off so no mortgage to worry about. My sibling does not earn enough to buy, so he would be able to have someone to live and I would be able to pay for a new property without it being an 'additional property', so I can avoid paying the stamp duty associated with that.

However, are there any tax considerations I need to consider when passing on the property? it has gone up in value since it was bought.

kingstreet

SDLT only concerns the purchase of property.

If you are giving the property away and will have no further interest in it, it will fall outside your estate for Inheritance Tax purposes after seven years. This is only an issue if your total estate including the value of the property is more than £325K.

PasturesNew

SDLT doesn't only concern the purchase of a property - it's on the "transfer value" of the property, so SDLT would be payable as if it were sold at the proper price. If the house is small/cheap it might be that there is no Stamp Duty due.... but "the usual rules" for that value of property, in that location, would apply.

p00hsticks

steveburns wrote: »

However, are there any tax considerations I need to consider when passing on the property? it has gone up in value since it was bought.

If it's not been your main residence for the whole duration of you owning it you need to consider if you'll have any Capital Gains Tax to pay when you dispose of it to your brother.

https://www.gov.uk/tax-sell-property

SDLT_Geek

If the plan is for your brother to "gift" the property back to you once you have bought your other property then it will be ineffective to help you escape the 3% SDLT on your purchase.

steveburns

No he would not have to give it back to me ever (it was inherited and I consider it the families, not just mine anyway) and it has not been my main residence the whole time. Since i moved I have been renting in the place I work and renting out the house I own. It is only worth putting it under his name if there is no tax for him to pay. if there is tax then saving the stamp duty is not worth it. It is worth around 160k

AnotherJoe

Surely it's worth it for him to pay less than a years rent to be gifted a house which means he won't need to pay any more rent ever ?

getmore4less

PasturesNew wrote: »

SDLT doesn't only concern the purchase of a property - it's on the "transfer value" of the property, so SDLT would be payable as if it were sold at the proper price. If the house is small/cheap it might be that there is no Stamp Duty due.... but "the usual rules" for that value of property, in that location, would apply.

No SDLT on gifted property.

The OP says they don't live in it, the CGT assessment (needed on all transfers) may result in a liability.

Preacher64

I don’t know what the tax implications are but it’s a lovely gesture and attitude!

p00hsticks

steveburns wrote: »

No he would not have to give it back to me ever (it was inherited and I consider it the families, not just mine anyway) and it has not been my main residence the whole time. Since i moved I have been renting in the place I work and renting out the house I own. It is only worth putting it under his name if there is no tax for him to pay. if there is tax then saving the stamp duty is not worth it. It is worth around 160k

Any Capital Gains tax would be for you to pay, not him (although if someone was being given a house, I'd say it would be a good gesture for them to offer to fund it for the donor).

It may well be that no CTG is due - you'd need to know the market value when you inherited it and at present, how many months you have owned it. I beleive you get lettings relief for the time it has been rented out - there are CGT calculators around on the web that will show if any would be due.

kingstreet

PasturesNew wrote: »

SDLT doesn't only concern the purchase of a property - it's on the "transfer value" of the property, so SDLT would be payable as if it were sold at the proper price. If the house is small/cheap it might be that there is no Stamp Duty due.... but "the usual rules" for that value of property, in that location, would apply.

I was referring to the OP's comment about his onward purchase, but in the context of your reply, it's a gift. There is no consideration.