Selling property to daughter

[lunar]

My wife and I own a property which we let. It is valued at £575k. If I gift the property to my daughter and God willing live the required 7 years then I am liable to cgt, since the purchase price was £220k.
Could I sell the property to my daughter for say £100k, in which case no profit is made?
There is no mortgage on the property.
Thanks.

[bd6759]

Your liability to CGT arisies on the disposal. A gift is a disposal, as is a sale. CGT is calcuated using the market value, regardless of the amount received.

[lunar]

Thanks.
Also, is the cgt payable at the beginning when I make the gift or after 7 years have elapsed.

[maths]

I think you may be confusing CGT with IHT

The 7 years to which you refer is relevant only for IHT. It has no relevance for CGT.

CGT is in principle payable on 31 January after end of tax year in which disposal was made.

[lunar]

Ok.
The problem would be that if I gift the property I would not be able to afford the tax payable. I would have to get a loan!

[maths]

This is always the problem with gifts and CGT.

It is possible to pay any CGT charge by instalments if that helps; but you do still need to find the cash !!

[bd6759]

Ok.
The problem would be that if I gift the property I would not be able to afford the tax payable. I would have to get a loan!

Then sell it to your daughter for a price that equals your tax libaility. She should be able to get a mortgagee for that amount.

[LozaACCS]

You could consider gifting the property into trust and electing to hold over the gain under S260 TCGA 1992, care is needed in case the trust is or could be settlor interested, there are also restrictions in a potential claim for PPR, you would need to seek formal advice

[maths]

Settling on trust will precipitate a not insignificant IHT charge.

[lunar]

Ok.
The problem would be that if I gift the property I would not be able to afford the tax payable. I would have to get a loan!

Then sell it to your daughter for a price that equals your tax libaility. She should be able to get a mortgagee for that amount.

I don,t think I can sell the property at such a low value just to cover the cgt. If I am not mistaken, do I not have to sell at the market price?