Transferring assets in event of terminal illness

daeargwr

Married couple, one of which own a second property entirely in their name which they inherited about 10 years ago (and have never lived there).  Their spouse has been diagnosed with a terminal illness and looking online there is a suggestion that the property should be transferred into their name as when it's then re-inherited by the surviving spouse (which is what the will stipulates) it resets the clock in terms of Capital Gains Tax if the property was to be sold in future.
Deathbed Tax Planning: Capital Gains Tax vs Inheritance Tax

Is my understanding correct?

Is it DIYable or only something a conveyancer can do?  I can see from the land registry website it would be a whole property transfer (TR1) along with AP1 and ID3

nom_de_plume

I inherited a property and, many years later, sold it on. The solicitor handling the sale added my wife to the ownership at / around the same time as the sale to take full advantage of her CGT allowances. In your case, I suspect it will "reset" half of the CGT liability and not the full amount.

Dead_keen

daeargwr said:

Married couple, one of which own a second property entirely in their name which they inherited about 10 years ago (and have never lived there).  Their spouse has been diagnosed with a terminal illness and looking online there is a suggestion that the property should be transferred into their name as when it's then re-inherited by the surviving spouse (which is what the will stipulates) it resets the clock in terms of Capital Gains Tax if the property was to be sold in future.
Deathbed Tax Planning: Capital Gains Tax vs Inheritance Tax

Is my understanding correct?

Is it DIYable or only something a conveyancer can do?  I can see from the land registry website it would be a whole property transfer (TR1) along with AP1 and ID3

Yes, but. If this is done by itself there are no tax rules to stop it giving you an uplift in market value base cost following the death.  If it is mortgaged then there can be some stamp duty.

However, if this is step 1 of a bigger plan then it might be seen as abusive so that the GAAR may be in point (that's a bad thing because of penalties and stuff like that).  But if nothing else is planned with the property then the GAAR is not relevant. 

Is it DIYable?  Everything is DIYable if there is a YouTube video.  But if the amount of tax potentially at stake is material then it would make sense to get professional advice. 

Keep_pedalling

They really should not do this. If the property is transfered now the receiving spouse will effectively be gaining the house at the original purchase price. Death wipes out any CGT built up over the years so best to leave things alone for the time being. 

silvercar

Keep_pedalling said:

They really should not do this. If the property is transfered now the receiving spouse will effectively be gaining the house at the original purchase price. Death wipes out any CGT built up over the years so best to leave things alone for the time being. 

I think that’s the intention. The receiving spouse gains the house at original purchase price. They sadly pass away. The remaining spouse (and original owner) inherits the house at current market value. Thereby avoiding a CGT bill based on original purchase price when they eventually sell.

daeargwr

silvercar said:

Keep_pedalling said:

They really should not do this. If the property is transfered now the receiving spouse will effectively be gaining the house at the original purchase price. Death wipes out any CGT built up over the years so best to leave things alone for the time being. 

I think that’s the intention. The receiving spouse gains the house at original purchase price. They sadly pass away. The remaining spouse (and original owner) inherits the house at current market value. Thereby avoiding a CGT bill based on original purchase price when they eventually sell.

Yes that's exactly it

poseidon1

The blog below from a top tier tax consultancy flags the opportunity  - 

https://forbesdawson.co.uk/articles/2022/12/22/tax-advantages-of-a-gift-to-dying-spouse/

Appears HMRC are not concerned this breaches GAAR principles.

I would not DIY the process, if the potential CGT savings are very high. 

Keep_pedalling

Apologies for getting this back to front.