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Gifting 50% of rental property to sons

Tax planning following withdrawal of letting relief in April

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I have elderly clients in their eighties (husband/wife) who own buy to let property jointly which was previously their main private residence.  Its valued at 200K

They are trying to sell this buy this property and been on a market for several months. The reason for the sale is if not sold before March then they would end up with a hefty tax bill mainly due to the letting relief withdrawal.  Therefore trying to understand any tax planning opportunities before its too late.

They have two sons (age late forties) and would it be worth gifting 25% each to them to make use of their capital gains tax allowance.  Though they may end up with IHT liability should they not live seven years.  If the couple sold the property at market value (50k each) to their sons could this work ?





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By David Heaton
23rd Dec 2019 17:12

Take some paid advice, starting with how to value a 25% interest in a jointly-owned property (it's not automatically 25% of the market value of the whole).

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By Tax Dragon
23rd Dec 2019 17:36

To add to David's point, the IHT value is likely higher than the CGT one. Different principles apply.

I'd further add that, if heretofore they had planned to hold the property until death (when there is no CGT… OK, there can be CGT but only in limited circumstances - this is not one of them), then changing that plan because of the change in CGT rules sounds like an outcome of them having been ill-advised.

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