Tax / Liabilities on gifting / being gifted a property

[sunnybono]

Morning,

A colleague who is a non UK resident is looking to gift a UK property (currently rented out) to his daughter, however he has concerns regarding tax for both parties.

My research suggested that he will have to pay CGT, however as a non resident this is significantly lower than what a resident would pay, and his daughter would incur no taxation except for ongoing tax on rental income (and IHT if the father passes within 7 years).

Does this sound about right?

Thanks

[sunnybono]

Anybody?

[Sheepshanks]

Sounds right, although I don't know about IHT - would that still be payable if CGT had been paid? Hopefully a moot point.

[mackay45]

SDLT?

[Eric Mc]

Is it a genuine gift? Does the father expect to have any rights of access or residence to that property?
Is he placing any restrictions or conditions on the daughter's use of the property?
Was the property ever the father's main residence?


The CGT position is outlined quite well here -

https://taxscouts.com/capital-gains-tax-on-gifted-...

[sunnybono]

Thanks All.

Eric Mc said:

Is it a genuine gift? Does the father expect to have any rights of access or residence to that property?
Is he placing any restrictions or conditions on the daughter's use of the property?
Was the property ever the father's main residence?


The CGT position is outlined quite well here -

https://taxscouts.com/capital-gains-tax-on-gifted-...

Hi Eric,

Genuine gift, property is currently rented out via a management firm and this responsibility would then fall on the daughter. The property was a main residence for approx 5-6 years from around 1974/5 - 1980.

Thanks

[Eric Mc]

There would be CGT on the transfer - but as it was the main residence there would be some reliefs available. Was it owned outright by the father or owned jointly with a spouse/partner?

[sunnybono]

Eric Mc said:

There would be CGT on the transfer - but as it was the main residence there would be some reliefs available. Was it owned outright by the father or owned jointly with a spouse/partner?

Currently owned by husband and wife, joint purchase.

[Welshbeef]

SDLT is the kicker and it’s also clearly with the 3% surcharge.

That tax could instead be spent making good the property using local trades and buying materials generating work. End tax take would likely be very similar

Surcharge SDLT kills buying and selling.

[Welshbeef]

https://www.thetimes.co.uk/money-mentor/article/av...

[sunnybono]

Welshbeef said:

SDLT is the kicker and it’s also clearly with the 3% surcharge.

That tax could instead be spent making good the property using local trades and buying materials generating work. End tax take would likely be very similar

Surcharge SDLT kills buying and selling.

Article suggests otherwise?

"If the deeds of your home have been transferred to you, mortgage free, by someone else – either as a gift or in a will – then you won’t have to pay stamp duty on the market value of the property."

[Alpinestars]

No SDLT if no consideration. CGT as it’s a U.K. situs asset (even if non resident). IHT gift as it’s a U.K. asset (even if non domiciled).

No tax for the daughter on gifting.

[The Moose]

There may be a gift tax implication in his country depending on where that is.