Gifting a rental property
tinajanine65
Registered Posts: 21 New contributor 🐸
We have a client who has several rental properties, split equally between himself and his wife. He wants to give one of the properties to his son and wants to know the best way to go about it, Capital Gains etc.
Does anyone have experience on this?
Thanks
Does anyone have experience on this?
Thanks
0
Comments
-
Transfer
Hi
The gift of the property would be dealt with as a disposal, at market value, on the date of transfer and your client should account for the CGT at that time.
Assuming that your clients receive no further income/benefit from the property, the gift would be exempt from IHT if the client (plus wife) live 7 years from the date of gift, but would be included for IHT on a sliding scale from 0-7 year from the gift. This is due to the fact that it will be a potentially exempt lifetime transfer.
However, due to the interaction between CGT and IHT, you need to consider whether the transfer is required at all.
Is the joint estate of your clients over 2 x the IHT threshold? If so, this sort of planning could be effective.
Is the joint estate around 2 x the IHT threshold? If so, consider using the annually allowable gifts along with gifts of any amounts of income in excess of living expenses, which are also exempt from IHT.
If well under 2 x IHT threshold - don't bother at all.
Cheers0 -
Presumably this is to avoid higher rate tax on rental income rather than IHT, or perhaps both.
Might want to consider the stamp duty impact too.0 -
I would suggest speaking to a solicitor who specialises.0
-
gifting a rental property
Thanks for the responses.
He was thinking of bringing his son in to the business for about a year, with a split of 1 third each. Then the mom and dad ceasing and the son taking over, however if he carries on the rental or sells the property they do not know.
Am I correct in thinking the son would then be liable to CGT?
Thanks0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 325 NEW! Qualifications 2022
- 160 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 95 AAT Level 4 Diploma in Professional Accounting
- 8.9K For accounting professionals
- 23 coronavirus (Covid-19)
- 273 VAT
- 92 Software
- 275 Tax
- 138 Bookkeeping
- 7.2K General accounting discussion
- 202 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 583 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership