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Hold Over Relief

Gift of residential property to nephew

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I have a client who was gifted a property by his father many years ago (his father is still alive).  My client now wishes to gift it to his nephew at nil proceeds.  Can my client hold over the gain that is arising to his nephew or does he have to pay CGT on a deemed transaction at open market value and thus pay quite a large chunk of CGT?

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By gainsborough
22nd Jan 2020 13:43

If it is not a business asset, Peter, then no scope to hold over gain and CGT will be payable on a deemed transaction on open market value as you say and also a PET for IHT too.

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Replying to gainsborough:
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By Tax Dragon
22nd Jan 2020 14:14

Worth adding that for HOR the business has to be a trade. See s165(2). If you follow JB, you may have been misled on that point by one or two of his posts.

The good news is that CGT is not part of the diminution of the IHT estate (the PET).

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By Accountant A
22nd Jan 2020 14:29

You can generally take advantage of any relief provided for by the legislation. If you can find a hold over relief to fit your circumstances, go for it.

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By Rebecca Cave
22nd Jan 2020 14:54

The gift will be treated as a transfer at market value, so CGT will arise. Holdover relief under TCGA 1992 s. 165 is not due as the asset is not a buisness asset.
Hold over relief under TCGA 1992 s 260 is not due as there is no immediate charge to IHT. The gift is a PET for IHT.

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Replying to Rebecca Cave:
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By Tax Dragon
22nd Jan 2020 16:22

Worth adding that for HOR the buisness has to be a trade. See s165(2). If you follow JB, you may have been misled on that point by one or two of his posts.

It's possible (caveat emptor) to 'manufacture' a CLT for IHT to achieve s260 HOR; but doing so is unlikely to wash its face, tbh.

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By The Dullard
22nd Jan 2020 17:32

Don't suppose it's a farmhouse/cottage?

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