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Where Taxpayers and Advisers Meet

CGT on gifted property

Treggy
Posts:17
Joined:Fri Mar 31, 2017 11:46 pm
CGT on gifted property

Postby Treggy » Wed Apr 26, 2017 2:49 pm

I, a 40% income tax payer, bought a flat in 2001 for £107k. I have occupied it but not as my main residence. I gave my wife, a 20% tax payer, 50% of it last year when it was worth £190k. The flat is now worth £200k. We are going to gift it to our son. I bought it for £107k and will now give my share value £100k to my son. My wife received a share worth £95k and is gifting it worth £100k. Ignoring for now the costs of buying and transferring, what CGT is to be paid by each of us?

someone
Posts:691
Joined:Mon Feb 13, 2017 10:09 am

Re: CGT on gifted property

Postby someone » Wed Apr 26, 2017 3:07 pm

Not sure I understand your numbers.

Your gift to your wife would be at no loss, no gain. Or did you do the gift and then get married (so you paid capital gains tax on the gift on your wife to be?)

Assuming you were married at the time of the initial gift to your wife you are each gifting a share worth 100K that was "bought" for 53.5K. So each of you has a gain of 46.5K

I don't know the CGT rates - 18% and 28% I think but I'm not sure and can't be arsed to google it but I think roughly 7K tax by your wife and 10.5K tax by you. (Wait for others to comment as I might have got that completely wrong)

You could each give your son a quarter of your respective shares each year for four years and use up your CGT allowance over four years and pay no CGT tax (I think)

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT on gifted property

Postby maths » Wed Apr 26, 2017 3:10 pm

Gift to wife is an inter-spouse transfer at no gain/loss ie spouse takes 50% of your base cost, 53.5k.

On gift to son you each have a gain of 46.5k less exempt amount 11.3k giving each net 35.2k.

CGT at 18% for wife and 28% for you.

Treggy
Posts:17
Joined:Fri Mar 31, 2017 11:46 pm

Re: CGT on gifted property

Postby Treggy » Wed Apr 26, 2017 3:57 pm

Thanks maths and someone. We were married at the time of the gift of 50% of the flat.


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