Gifted Properties and Charities

An individual gifts a property to a charity. What are the tax implications for the charity?

Didn't find your answer?

I am seeking a second opinion:

When a charity is gifted a property. What are the tax implications for the charity? Will the charity be subject to Stamp Duty or Land Transaction Tax on the value of the property (valued by a Chartered Surveyor). If the charity has to pay SDT or LTT, as a non-exempt Charity, does a relief or part relief apply? 

Looking forward to receiving your viewpoint along with links to legislation. 

Thank you.

Replies (10)

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By David Ex
23rd Feb 2024 22:13

If you want a second opinion, give us your opinion first. Looking forward to receiving your viewpoint along with links to legislation.

Thanks (3)
VAT
By Jason Croke
23rd Feb 2024 22:23

Agree with David ex, you said you are looking for a 2nd opinion but haven't given your first opinion.

You are asking about two different taxes which operates in two different Countries, your hypothetical charity is receiving gifts in England and Wales?

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Replying to Jason Croke:
Bee
By elpis.bs
23rd Feb 2024 23:05

The gifted property is located in Wales. So LTT (instead of SDLT). There may be possibility that the gifter who is in England would also conceade properties that are in England. The Charity is based in Wales but the LTT or SDLT relates to the country where the property is.

Thanks (1)
Bee
By elpis.bs
23rd Feb 2024 22:58

Good point.

The legislation indicates that if a property is gifted, and the charity keeps it then no Stamp Duty applies. It is likely that this would be the same for LTT.

(1)- https://www.gov.uk/guidance/tax-relief-on-gifts-of-land-buildings-or-shares

Not to mix and match legislations, but there is a reason for me to mention this, the stamp duty would only apply (for an individual) if the recipient takes over the mortage and the mortgage value is over the SDLT or the LTT (Wales).

(2)- https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

The solicitors (based in England) engaged for completing the transaction are pointing to the part of that legislation (2) relating to companies stating that the stamp duty should apply and the charity could claim relief.

(3)- https://www.gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-prope...

I am not entirely sure that the solicitors have a valid point and I believe that the legislation(1) applies to the charity and not (2) even if (3) could give way to relief.
It looks to me that perhaps the solicitor is complicating matters.
The solicitors are offering their services at a discounted fee so that they can gain more experience with working with charities.

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Replying to elpis.bs:
By Ruddles
23rd Feb 2024 23:24

Is the donor connected to the charity?

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Replying to Ruddles:
Bee
By elpis.bs
23rd Feb 2024 23:39

I have checked this and no they are not.

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Replying to elpis.bs:
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By FactChecker
23rd Feb 2024 23:55

I assume that your mention of mortgages is a red herring (i.e. that property being gifted is not so encumbered)?

And likewise, based on your answer to Ruddles, that the solicitor's concern appears unfounded (unless they can expand on and be more specific as to those concerns)?
[The relief for charities, relates to when they *buy* land and property for charitable purposes.]

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By Tax Dragon
24th Feb 2024 06:26

I would hope that the solicitor is including reading the 2017 Act as part of the experience they are looking to gain, rather than relying on the gov.uk introductory guides you are providing links to.

I'm not quite clear whether you and/or the solicitor are saying that there's no tax because there's a relief. I would just point out that any available relief applies only if it is claimed. https://www.legislation.gov.uk/anaw/2017/1/section/17/welsh

This reply in no way endorses your/the solicitor's analysis. As Justin confirms elsewhere, LTT is not my forte and it would be wrong for me to get involved in your scenario. I would though widen your definition of 'consideration'. It doesn't include only cash and debt/mortgage: any attachment of conditions/strings - in fact if there's any arrangement, agreement or understanding, if it's anything other than an absolute, unconditional and permanent gift - it's likely that there's consideration.

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DougScott
By Dougscott
24th Feb 2024 18:16

Having worked for a charitable housing assoiation in England we never paid any SDLT on properties donated or sold to us. You simply fill in the SDLT1 form to claim charitable exemption.

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Replying to Dougscott:
Bee
By elpis.bs
24th Feb 2024 21:52

Thank you so much for this. I believe that this should be the case.

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