Gifting a property to your children

Westhighlan_

I'm new on here.  I inherited a property and am thinking of selling it.  I was advised to gift it to my children and then sell it.  Is this going to incur Capital Gains Tax or save them from it?

silvercar

Westhighlan_ said:

I'm new on here.  I inherited a property and am thinking of selling it.  I was advised to gift it to my children and then sell it.  Is this going to incur Capital Gains Tax or save them from it?

Why were you advised this?

Are they already property owners? If not, they will lose their first time buyer status for when they do buy.

Obviously, if you gift it to them it is for them to sell it, not you. As a related transaction, it would be deemed to have been transferred at market value. They would only pay CGT on the difference between current value and sale price. You would have a CGT bill on the difference in value between when you inherited it and its current value.

By gifting it away, you would have it in your estate for the next 7 years and also could be accused of deprivation of assets if you needed care in the next few years.

the only time it would be worthwhile and avoid having it as part of your estate is if you arranged a deed of variation on the will of whoever you inherited it from. This needs to be done within 2 years of the death and effectively means it’s considered as if they had inherited (but see my point about first time buyers status above.

user1977

Westhighlan_ said:

I was advised

By whom, and why?

Mark_d

You would have to pay GCT for the gain whilst the property was in your name.  Your children would need to pay CGT for gain silt the property is in their name, assuming it is not their primary residence.  You can't avoid paying tax by transferring the asset to your children rather than selling it to them

anselld

If you have recently inherited it then it is unlikely to incur much CGT as the gain is calculated on the increase since probate.

You would probably just be destroying your children's FTB status for no benefit.

Keep_pedalling

if you inherited the property some time ago and the value has increased then you will pay CGT on the transfer and they will pay no CGT unless they sell at over market value. If you sell it you pay CGT after you sell.

The former is likely to be the most costly option as there will be additional land registry fees and the selling fees can’t be offset against your CGT liability. 

km1500

in terms of tax treatment there is no real difference between you selling it and giving them the cash or just giving them the asset for them to sell.

there is no gift tax as such so the only tax I can think of is what has already been mentioned ie CGT on the increase in value between the probate value and what you actually sell it for - and you would have to pay this if you sell it yourself or if you transfer it to your children for them to sell.

EssexHebridean

Hi Westhighlan - welcome to the forum.

Are you in Scotland by any chance - just in case that makes a difference to anything?

Second question - what exactly is your motivation for looking for "alternative" routes to selling the property? 

Sam_666

What a great advice OP got, must be from local pub after few pints.
Tax avoidance is peace of cake, anyone can do it. Landlord, another round here.