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Does giving half of investment flat to partner give rise to CGT ?

My friend lived in a flat, and kept it, and rented it out when he went to live with his partner and has rented it out ever since (15 years). It has gone up in value by £150,000 and he now wants to give a half share to his partner, who he isn't married to. Would he have to pay capital gains tax even though no money has changed hands ?

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30th Nov 2012 15:16

Bargain not at arm's length

Hi there,

Yes I am afraid that gifting an asset to another person (unless it is of business assets - that do not include letting properties) gives rise to a chargeable occasion and unfortunately a potential capital gain based on the market value of the property at the date of disposal less the original cost of the 50% gifted.

However a word of caution here please - as your friend lived in the flat he would be entitled to main residence relief on his disposal of the property and also what is called lettings relief  whereas if he gifts 50% to the partner she would not be entitled to either main residence relief or lettings relief if she never lived in it as her main residence.

His seeming generosity might also put extra bawbees into the exchequer's coffers if and when the property is ultimately sold.

 

I hope that this helps but inevitably it could all come down to number crunching and when the ultimate disposal is known so your friend  would be best seeking professional advice where all the facts and figures and documents can be explored before taking such a step

regards

[email protected]

www.wamstaxltd.com

 

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Thanks a lot Bill...and I understand the PPR/lettings relief point as well, that wasn't something I'd thought of.

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30th Nov 2012 16:35

Say this to him quietly

If he marries her then there is no gain assessable.

 

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30th Nov 2012 17:07

@Phil Rees

 

Yes, but it may be worth gifting her half the house so that he does not have to marry her!

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30th Nov 2012 17:53

the price of love
But if he marries her she still won't get MRR or LR

Or did I miss the tongue in the cheek

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marriage

Funnily enough, I did mention the word marriage. He hasnt replied since.

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