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Where Taxpayers and Advisers Meet

Transfer of Property to my sister

jamieberkoff
Posts:1
Joined:Sun Feb 26, 2017 2:47 pm
Transfer of Property to my sister

Postby jamieberkoff » Sun Feb 26, 2017 2:50 pm

I live in the USA and I own a property in the UK. My parents live in the UK property. I am concerned about what happens when it comes the time to sell the property and how that impacts tax liability between the US and UK. To make it simple, I would like to transfer ownership of the property to my sister who is a UK resident. What is the most efficient way to do this without there being any tax implications.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Transfer of Property to my sister

Postby AGoodman » Tue Feb 28, 2017 1:58 pm

I can't comment on the US position but the UK implications of such a gift would be:

1. Non resident CGT would be payable if the market value of the property had increased since 6 April 2015. You would only pay tax on the increase since that date (there are several alternatives but this is the simplest). You can deduct the annual exemption of £11,100 and would then pay 18/28% depending on what other UK source income you have for the year. You have 30 days from completion to file an online return. Under the UK/US treaty (Art 24), you should receive a credit against any US tax levied on the gain.

(Small caveat - if you were temporarily non-resident from the UK - e.g. for less than 5 years - you could be liable for CGT on the entire gain on your return).

2. The value of the property would be subject to UK inheritance tax if you died within 7 years. You would benefit from the nil rate band of £325k but bear in mind that IHT is charged on UK domiciliaries (not residents) and you may still be UK domiciled. If still UK domiciled or deemed domiciled at your death, your worldwide estate would be subject to UK IHT. There is relief for double UK/US taxation although these may not help if you are not paying any US estate duty (with the US exemption being much higher).

There is no particular way to make this more efficient. If you did want to take this route then probably the earlier the better to minimise the gain - you could of course gamble that the value of the property will come down.

AG

Incredulum
Posts:2795
Joined:Thu Dec 03, 2009 5:35 pm

Re: Transfer of Property to my sister

Postby Incredulum » Tue Feb 28, 2017 4:33 pm

If the capital gain is significant then you can transfer a proportion of the property each year so as to utilise your annual exemption. But beware the value of the property going up to the extent that the gain gets bigger and bigger. If you are married then your spouse may be able to help too.

DavidTreitel
Posts:271
Joined:Thu Aug 16, 2012 4:31 pm

Re: Transfer of Property to my sister

Postby DavidTreitel » Sun Mar 05, 2017 4:26 pm

You would want to review any exposure to US gift tax on the proposed disposition.


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