Transferring a joint-owned rental property into one name - Capital Gains Tax question?

v6_pete

My wife and her father jointly own a small additional property (ie. both names appear on the property deeds) which is rented out to a long-term tenant.  Recently my wife’s father has expressed a desire to gift his part of the ownership over to my wife (my wife will be keeping the property, not selling it). In simple terms, all that effectively happens, I presume, is that his name is removed from the deeds. Grateful if someone could please explain though the position with regards to Capital Gains Tax – whether this would be due on her father’s part share of the house, and if so, is a 50:50 ownership split always assumed, unless you can demonstrate otherwise? Very many thanks for any advice.

Keep_pedalling

On the transfer he would have a CGT liability based on the current full market value of his share. If he is gifting to reduce his potential IHT liability a cash gift would be a better option. 

Jeremy535897

Leaving aside the question of whether it is a good idea or not, the capital gains tax situation is that father will be deemed to sell his share of the property to your wife at the market value of that share.
The share depends on whether the property is owned as joint tenants, in which case the property is usually treated as beneficially owned 50:50, or as tenants in common, where the documentation should show in what proportions the property is beneficially owned between them.
I am assuming English law applies. Ownership as joint tenants can be different from 50:50 if, for example, one party provided all the funds. Although not conclusive, how rent is allocated is another factor. A tenancy in common may divide the legal ownership equally, but there may be a declaration of trust that varies the beneficial interests between the parties.
In conclusion, start by establishing the facts.