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Capital Gains Tax upon gifting of a property - Transfer to spouse first?
raha
Posts: 8 Forumite
in Cutting tax
Hello,
I'd love to get some advice on capital gains tax following gifting of a buy-to-let property, and just sense-check my plan to reduce this and whether it is above board before I ask the solicitor to proceed.
The scenario is my Dad+Mum own BTL property jointly (50:50),
They want to gift it to their daughter (my sister) now.
They understand that they have to pay the CGT on the value of the property.
My Dad is a higher rate tax payer, and my Mum is a lower rate tax payer.
I read that transferring property between spouses does not incur any capital gains tax.
So my idea to my parents is: Dad first transfers his full share to Mum, so that it's owned 100% by Mum, and then Mum to gift it to my sister after that. so that the lower rate of CGT is payable when its gifted.
We calculated that they would save around £6k doing this. However, my Dad is not fully comfortable with the plan in case I am wrong, so I just wanted to get some reassurances and also clarify if I am right to suggest this or if there's anything I am missing.
Thank you!
I'd love to get some advice on capital gains tax following gifting of a buy-to-let property, and just sense-check my plan to reduce this and whether it is above board before I ask the solicitor to proceed.
The scenario is my Dad+Mum own BTL property jointly (50:50),
They want to gift it to their daughter (my sister) now.
They understand that they have to pay the CGT on the value of the property.
My Dad is a higher rate tax payer, and my Mum is a lower rate tax payer.
I read that transferring property between spouses does not incur any capital gains tax.
So my idea to my parents is: Dad first transfers his full share to Mum, so that it's owned 100% by Mum, and then Mum to gift it to my sister after that. so that the lower rate of CGT is payable when its gifted.
We calculated that they would save around £6k doing this. However, my Dad is not fully comfortable with the plan in case I am wrong, so I just wanted to get some reassurances and also clarify if I am right to suggest this or if there's anything I am missing.
Thank you!
0
Comments
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You need to do the sums first, as if Mother has used much of her basic rate band, the saving might not be worth the loss of an annual exemption.
https://www.gov.uk/capital-gains-tax/rates
0
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