Gifting property to my daughter

[stuart1944]

As stated l intend to gift a property to my daughter. The property is a buy to let and is morgage free. My understanding is that I can do this providing no money changes hands. In the near future my daughter intends to take out a morgage on the property and may gift me some money. Would this be treated as tax avoidance or would that be ok. Any advice gratefully received

[Mr Pointy]

I suspect you will need to consider CGT & she will need to consider Stamp Duty. IHT may come into it as well if you die within seven years.

[Caddyshack]

Some people add daughter then later remove self.

[anonymous-user]

stuart1944 said:

As stated l intend to gift a property to my daughter. The property is a buy to let and is morgage free. My understanding is that I can do this providing no money changes hands. In the near future my daughter intends to take out a morgage on the property and may gift me some money. Would this be treated as tax avoidance or would that be ok. Any advice gratefully received

Sounds odd to me. She'll run straight into enhanced rate Stamp Duty and enhanced rate CGT. Gifts both ways sounds bonkers as you'll both end up making PETs (Potentially Exempt Transfers) for IHT purposes which could result in a future Inheritance Tax charge. Whichever way you part with the property it's going to be a chargeable "disposal" for your CGT purposes.

I'd keep it simple,

• Sell the BTL
• Give her such cash as you want to
• Let her buy a decent home with normal rate stamp duty which will then be CGT free as her main residence.
• Let her invest any surplus in tax free ISAs etc which, going forward, are likely to easily outperform the BTL.

[TwigtheWonderkid]

What happens when she gets married (or she may be already) and then divorced? You could be giving away half your house to some scumbag.

[twokcc]

Not a tax expert so make our own inquiries
Could you gift her upto £125 this tax year then £125K next tax year,under stamp duty limit (including higher rate) so no sdlt to pay.

You would have to account for CGT on each sale but would get cgt allowance for 2 tax years and would only be for part of property that is sold. She will have to pay income tax on rental income on proportion that she earns.
Gets you where you want to be by say end April 2020 id first part done this tax year and if house worth less than £250k .

No doubt some more knowledgeable phers will advise on pitfalls

[Alpinestars]

CGT for you on the sale, which is deemed to happen at market value.

IHT, it’s a potentially exempt transfer (PET) and might be taxed if you survive 7 years.

Getting cash back might fall foul of the gift with reservation rules, which seek to reset the 7 year clock. Either way, she also makes a PET to you.

No SDLT as there’s no consideration.

[hypermark]

TwigtheWonderkid said:

What happens when she gets married (or she may be already) and then divorced? You could be giving away half your house to some scumbag.

Best to sell the property (you will have tho pay CGT) and put the proceeds into a trust (you and your partner can be trustees) for your daughter, the trust lends the money to your daughter. This way if she meets someone and she sells up and puts the cash into a joint house and later divorces the money is safe.

[NickCQ]

stuart1944 said:

Would this be treated as tax avoidance or would that be ok.

It’s not clear what tax you would be avoiding.

CGT payable the same as on a sale
IHT - do you reckon you’ll be above the £650k threshold once care costs, pension spending etc have come out? If you live more than 7 years it’s moot anyway.
Deprivation of assets for care costs - doesn’t matter as the sale transaction could be unwound anyway if investigated.