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?



  • Bloater
    Bloater Registered Posts: 19 New contributor 🐸


    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.

  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    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.
  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    I would suggest speaking to a solicitor who specialises.
  • tinajanine65
    tinajanine65 Registered Posts: 21 New contributor 🐸
    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?

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