This query relates to minimising future CGT that might arise on a residential property that I own in my sole name. Initially I lived in the property (so can claim some PRR) it's been let out for a large majority of the years that I've owned it. Details are as follows (assuming I was to sell the property now) :-
1 Current Value £120,000
2 Purchase Price -£55,000
3 Gain 65,000
4 Private Residence Relief -£4,670
5 Letting Relief - £4,670
6 Chargeable Gain £55,660
7 Additional information
• Leasehold property
• No mortgage
• Not working (nil rate taxpayer)
I am contemplating transferring a 12.5% share of the property to my cohabiting partner (we are not married) in each of the next 4 tax years so that we eventually have a 50:50 split.
My questions are as follows:
1. Pro Rata - if I go ahead with this I am assuming that all of the above figures are pro-rata, so the chargeable gain in this tax year would be £6,957.50 (£55,660 x 12.5%) and therefore within my annual CGT allowance. Is this correct?
2. Chargeable Assets - as the value of the share being transferred would only be £15,000 each year (£120,000 x 12.5%), assuming no uplift in value, am I correct in believing that I wouldn't even have to report this on my self assessment (i.e. the disposal/ transfer is below £44,400)?
3. Stamp Duty - I'm aware of the new 3% additional stamp duty on BTL properties. But as the value being acquired by my partner is under £40,000 would she be exempt from this? (also see my question re Consideration)
4. Consideration - a) what are the pro's and con's of transferring this as a gift as opposed to my partner paying me £15,000 in consideration for the transfer? b) would evidence of the consideration paid be needed, if so would a cheque or bank transfer of £15,000 from her to me be sufficient evidence? c) as an alternative she would be willing to transfer a part share of the home that we both live in to me as consideration. It's currently 100% owned by her and there would be no CGT implication (full relief) and is mortgage free. I figure that this is over complicating the situation (and adding another potential layer of cost) so would prefer not to do this at this stage, unless there is an advantage to doing this?
5. Land Registry - a) which Land Registry form/forms need completing? b) are there guidance notes? c) is there a fee for this and how much is it?
6. Record Keeping / Evidence - a) would I need to get a valuation as evidence each time I transfer a share of the property to my partner, or if the value of the consideration is in line with the current market value would this be sufficient? b) if I do need to get a valuation, would a sales valuation from a local estate agent be sufficient?
7. Other Costs / Considerations - are there any other costs or considerations that I haven't covered?
Any clarification on these points would be greatly appreciated
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