Mutual gifts of properties

Mutual gifts of properties

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Father dies in 2009 and the will leaves estate to son and daughter equally.

Estate comprises property A - probate value at £240,000, property B (attached to A) - £60,000, Property C - £150,000, Land - £27,000.

Son has always lived in property A and so they have always felt that a 50:50 split was unfair.  To this end, they have agreed that the son should have A,B and D, (total value £327K), and daughter has property C (£150,000).  However, the paperwork was never done to arrange this and has only just happened (Feb 15).  They are obviously way too late to do a Deed of Variation.

On paper, the daughter has made a gift of £88,500, at least based on Probate Values.  I'm sure MV at date of transfer would be more.  However they are only really putting into place what should have happened on death.

Have I got to declare the gift on the daughter's Tax Return?  If so, do we need to get the properties revalued at Feb 15, or in the circumstances use the PV as the deemed sale proceeds?  Furthermore, do we somehow have to bring in the £75K "consideration" she has received re the transfer of property C into her name or is this totally irrelevant?

Replies (5)

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By pawncob
03rd Jul 2015 10:27

You don't have to declare the gift, but in theory she's disposed of property subject to CGT and (may have) made a gain. Using probate values there's no gain, just a reallocation of the assets.

Presumably someone signed a certificate for SDLT purposes, presumably  based on probate values. If this is the case, I'd use those values and ignore any gain. Others might demur.

 

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Replying to Wilson Philips:
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By Swedish Chef
16th Jul 2015 15:47

Thanks

Even if I did substitute MV, so that there is gain, doesn't s248A TCGA 1992 come into play so that I can claim roll-over relief?  

The examples in CG73008 only refer to non-connected persons - but I cannot see anything in the legislation that says it cannot apply to connected persons as well....?

I believe all 5 conditions are met, though I am concerned that as one of the properties (A) is the PPR of the son, this may cause a problem - but I cannot get my head round it!

 

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By Cloudcounter
16th Jul 2015 15:26

Exactly what does the will say?

If the father left the estate to children in equal shares, that does not necessarily mean that he left half of every asset to each child,  It would be quite normal to value the whole estate and instaed of selling everything for the beneficiaries to take a selection of assets balanced out by cash.

Of course if the will does say that property A is left to S & D jointly then that's different

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Replying to Hugo Fair:
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By Swedish Chef
16th Jul 2015 15:40

The will......

....leaves the estate as a whole 50:50.  There was no specific allocation of assets so for this purpose we are assuming that they are joint owners of each asset.

The problem is that they are now re-organising the assets so that one gets more than the other - more than 5 years after the event.

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By Swedish Chef
20th Jul 2015 16:13

Am I right......

... in thinking that as property A is not the daughter's PPR, then she will get the roll-over relief, but the son will not if he sells within 6 years?

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