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Where Taxpayers and Advisers Meet

Selling BTL- gifting equity for deposit to my tenants -CGT liability?

andrewlato81
Posts:17
Joined:Sun May 15, 2016 10:28 pm
Selling BTL- gifting equity for deposit to my tenants -CGT liability?

Postby andrewlato81 » Tue Feb 04, 2025 3:39 pm

Hello,

Not sure if this is right department for my question.

One of my tenants have expressed interest in buying a property from us. I am considering best approach to it, having spoken to their mortgage broker- there's a option of gifting them 5% equity for a deposit and no own cash required from them to buy. Another option is for them to provide 5% deposit, then use my 5% discount to achieve 10% equity deposit.

Purchase price would be £130000, which is in line with local valuations.

My question is simple:
1. If I declare sale price at £130k, then gift tenants 5% equity(£6500) leaving them with £123500 mortgage, will I be liable to pay 18%/24% CGT on £6500 I am giving away to them? Or is there a way of doing it without exposing myself to yet another tax?

2. I think that another option for this to avoid any CGT on gifted equity would be to discount sale price to £123500, then for tenants to provide 5% deosit leaving them with £117325 mortgage? Any other solutions that please?

Many thanks
Andre

bd6759
Posts:4413
Joined:Sat Feb 01, 2014 3:26 pm

Re: Selling BTL- gifting equity for deposit to my tenants -CGT liability?

Postby bd6759 » Wed Feb 05, 2025 12:21 am

Gifts are not deductible for CGT.

Your option is to sell it cheaper, but not so cheap as take the transaction away from being considered a bargain at arms length.

andrewlato81
Posts:17
Joined:Sun May 15, 2016 10:28 pm

Re: Selling BTL- gifting equity for deposit to my tenants -CGT liability?

Postby andrewlato81 » Thu Feb 06, 2025 4:29 pm

Thank you again @bd6759


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