Gifting rental property before sale

Would this avoid CGT, although creating a PET

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Taxpayer has had a rental property for many years which now has accumulated a large gain. 
He wants to stop letting, and is thinking of gifting it outright to his daughter, who would probably immediately sell it.

Obviously this would create a PET, but would the daughter avoid paying any CGT on sale?

Replies (11)

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By David Ex
28th Feb 2024 18:05

I think the daughter makes a gain to which CGT might apply if she sells for more than her base cost. Maybe I'm missing something.

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Replying to David Ex:
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By RG
28th Feb 2024 18:13

Would the base cost be the value at the time of gifting?

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Replying to RG:
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By David Ex
28th Feb 2024 18:22

RG wrote:

Would the base cost be the value at the time of gifting?

I believe so. That's what the father will be bringing in as his disposal value for his CGT calculation, no?

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Replying to RG:
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By FactChecker
28th Feb 2024 18:47

For avoidance of doubt ... when you say "would the daughter avoid paying any CGT on sale?", you are aware that the gift itself will trigger CGT liability for donor?

And as David says, this will be based on MV of the gift at date of gift.
Daughter's liability for CGT is entirely separate, based on period of her ownership.

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By FactChecker
28th Feb 2024 18:40

Thought you said you retired 3 years ago ... so is 'the taxpayer' you?

Either way, there's a lot you haven't mentioned ... type of entity that actually owns the property? / whether there's any outstanding mortgage? / meaning of "accumulated a large gain" (i.e. do you mean accumulated or just that asset value has increased)?

But it sounds like you want some professional advice ... which is beyond a public forum.

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By Matrix
28th Feb 2024 19:09

What are the perceived benefits over just giving her the cash?

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Replying to Matrix:
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By David Ex
28th Feb 2024 19:13

Matrix wrote:

What are the perceived benefits over just giving her the cash?

I’m guessing the OP believed there was some St Paul’s cathedral sized loophole.

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By Wanderer
29th Feb 2024 06:41

Yes is the (qualified) answer to your question.

But you are asking the wrong question.

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By RG
29th Feb 2024 11:02

Thanks, I was sure that this wouldn’t be possible but couldn’t marshall my arguments, which is of course gifting creates disposal

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By SteveHa
29th Feb 2024 11:25

Not the wheeze you think. MV gift for CGT purposes.

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By AndyC555
29th Feb 2024 12:28

"would the daughter avoid paying any CGT on sale?"

Yes, because the gain would arise on the father and he would be paying the CGT.

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