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  • FIRST POST
    • ypapandr
    • By ypapandr 16th Apr 19, 4:13 PM
    • 19Posts
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    ypapandr
    Selling second home pre-purchase - Exchange or Completion
    • #1
    • 16th Apr 19, 4:13 PM
    Selling second home pre-purchase - Exchange or Completion 16th Apr 19 at 4:13 PM
    My wife and I are buying a house. To avoid the 3 per cent extra SDLT, she will gift her property in Italy to her sister. When does the donation have to be completed, is it pre-exchange or pre-completion? I would think pre-exchange but grateful if you could confirm. many thanks!
Page 1
    • Linton
    • By Linton 16th Apr 19, 4:56 PM
    • 10,585 Posts
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    Linton
    • #2
    • 16th Apr 19, 4:56 PM
    • #2
    • 16th Apr 19, 4:56 PM
    Wont Capital Gains Tax based on the current market value be due if the house is gifted?
    • sheramber
    • By sheramber 16th Apr 19, 5:12 PM
    • 6,189 Posts
    • 4,676 Thanks
    sheramber
    • #3
    • 16th Apr 19, 5:12 PM
    • #3
    • 16th Apr 19, 5:12 PM
    https://www.gov.uk/capital-gains-tax/what-you-pay-it-on
    • ypapandr
    • By ypapandr 16th Apr 19, 5:19 PM
    • 19 Posts
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    ypapandr
    • #4
    • 16th Apr 19, 5:19 PM
    • #4
    • 16th Apr 19, 5:19 PM
    thanks - however, this is her main home and is in Italy so under the double taxation treaty would only be subject to CGT tax in Italy. Correct? However, in terms of timing, when will we need to complete the donation by? Exchange of contracts or completion?
    • 00ec25
    • By 00ec25 16th Apr 19, 7:29 PM
    • 7,939 Posts
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    00ec25
    • #5
    • 16th Apr 19, 7:29 PM
    • #5
    • 16th Apr 19, 7:29 PM
    thanks - however, this is her main home and is in Italy so under the double taxation treaty would only be subject to CGT tax in Italy. Correct?
    Originally posted by ypapandr
    your wife owns a property in Italy
    therefore in no way is it your wife's main home, since you are married and the main home is where you both live, which must be in the UK otherwise you would not be asking on here

    that said, you are correct that under the tax treaty property in Italy is taxed in Italy, not in the UK.
    see article 13 para 1
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/498371/italy-dtc_-_in_force.pdf

    So any tax your wife as the owner would face would be under whatever Italy does for property sales, of which I have not even the first idea

    tHowever, in terms of timing, when will we need to complete the donation by? Exchange of contracts or completion?
    Originally posted by ypapandr
    SDLT in the UK is due on completion not on exchange
    https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm07600
    Last edited by 00ec25; 16-04-2019 at 11:18 PM.
    • ypapandr
    • By ypapandr 17th Apr 19, 8:31 AM
    • 19 Posts
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    ypapandr
    • #6
    • 17th Apr 19, 8:31 AM
    • #6
    • 17th Apr 19, 8:31 AM
    Perfect, so from the above, my conclusion would be no CGT in UK and no extra 3 per cent SDLT if asset transferred in Italy pre-completion. We are waiting for mortgage valuation so I'd expect exchange to happen in 4/6 weeks and completion 2/3 weeks after that. Does that seem about right?
    • uknick
    • By uknick 17th Apr 19, 9:32 AM
    • 897 Posts
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    uknick
    • #7
    • 17th Apr 19, 9:32 AM
    • #7
    • 17th Apr 19, 9:32 AM
    Wow, I wish my brother was that generous to give me a house to avoid paying extra SDLT. I can only assume the SDLT 2nd home charge exceeds the value of the property in Italy and any Italian taxes due on the sale/transfer.
    • silvercar
    • By silvercar 17th Apr 19, 11:29 AM
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    silvercar
    • #8
    • 17th Apr 19, 11:29 AM
    • #8
    • 17th Apr 19, 11:29 AM
    Wow, I wish my brother was that generous to give me a house to avoid paying extra SDLT. I can only assume the SDLT 2nd home charge exceeds the value of the property in Italy and any Italian taxes due on the sale/transfer.
    Originally posted by uknick
    I would guess it is a family home and it doesn't much matter which siblings name is on the deeds.
    • SDLT Geek
    • By SDLT Geek 17th Apr 19, 3:27 PM
    • 522 Posts
    • 331 Thanks
    SDLT Geek
    • #9
    • 17th Apr 19, 3:27 PM
    • #9
    • 17th Apr 19, 3:27 PM
    I would guess it is a family home and it doesn't much matter which siblings name is on the deeds.
    Originally posted by silvercar
    SDLT has little to do with "whose name is on the deeds". What matters is who has an underlying interest in the property. So "putting a property into the name of a sister" whilst retaining an underlying interest does not do anything to save SDLT. The property would still "count against" the person with the underlying interest for SDLT purposes.
    • silvercar
    • By silvercar 18th Apr 19, 6:58 AM
    • 38,884 Posts
    • 162,332 Thanks
    silvercar
    SDLT has little to do with "whose name is on the deeds". What matters is who has an underlying interest in the property. So "putting a property into the name of a sister" whilst retaining an underlying interest does not do anything to save SDLT. The property would still "count against" the person with the underlying interest for SDLT purposes.
    Originally posted by SDLT Geek
    How would hmrc know that anyone retained an underlying interest? Particularly for a property overseas?
    • 00ec25
    • By 00ec25 18th Apr 19, 7:14 AM
    • 7,939 Posts
    • 7,648 Thanks
    00ec25
    How would hmrc know that anyone retained an underlying interest? Particularly for a property overseas?
    Originally posted by silvercar
    as ever, there are sophisticated frauds and simple frauds, some work, some don't

    in principle you are correct, whether "you" are sufficiently dishonest to want test it is a different matter
    • uknick
    • By uknick 18th Apr 19, 8:32 AM
    • 897 Posts
    • 391 Thanks
    uknick
    This thread seems to be moving down the tax evasion route. I'm sure the OP never intended that, and was just looking at ways of avoiding paying certain taxes.

    If there was ever any thought of transferring the property back after a period of time, then CGT would rear its head again along with, possibly, a SDLT 2nd property surcharge.
    • Keep pedalling
    • By Keep pedalling 18th Apr 19, 8:33 AM
    • 6,284 Posts
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    Keep pedalling
    I would guess it is a family home and it doesn't much matter which siblings name is on the deeds.
    Originally posted by silvercar
    It does when the other sibling sells it and pockets the money
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