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Gifting a house and CGT.
After reading a couple of threads on here recently about CGT liability even if you move back into your own - currently rented out - property for a year or two, I brought this to the attention of a friend who was considering doing just this. The news didn't go down well...
She has a (second) house that was bought as a BTL around 10 years ago - I don't think she ever lived in it, so it's been rented out all that time. Ultimately it was designed to benefit her two kids when they come of age, and would hopefully provide a house deposit for each as they start their working lives.
Her original intention was to sell her current property (she'll be moving to a different area at some point in any case), and move into the rented one and make it her main residence for as long as she's in the area - probably a couple of years or so. When her children complete their education and get jobs, she would then sell this house and split the purchase price between them, and she'd move closer to other family using the earlier proceeds from her 'main' main house - that sort of thing. However, if she's nobbled for near-full CGT on this rented house, it's unlikely to realise the two deposit sums she was hoping for. This house is worth roughly £280k-ish.
So, I'm guessing that if she sells this house, she be liable for CGT roughly split in the ratio of rent-to-living in, so 5:1? Don't know what she paid for it, but it was when the market was struggling, so I suspect it's gone up comfortably over £100k in value.
What would happen if she 'gifted' the house to her children instead? Would CGT still apply? If so, that would suggest she'd need to find ~£40+k from her savings, as she wouldn't have the sale proceeds from this house to use?
Thoughts, please? Ta.
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