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Where Taxpayers and Advisers Meet

Stamp Duty and Gifts

Ben951753
Posts: 3
Joined: Sun Feb 11, 2018 12:47 pm

Stamp Duty and Gifts

Postby Ben951753 » Sun Feb 11, 2018 1:20 pm

Can someone please tell me if the following would avoid stamp duty (and any other taxes) and just as importantly if it is all above board and legal.

Sister A has just inherited a property (she has NO other property). (There is no IHT, taxes, mortgage due on the property). For personal reasons (NOT related to any money matters) she wants a quick sale.

Sister B has sold her house and so had NO property in her name. She is currently renting.


Plan


• Sister A gifts property to Sister B

• Sister B gifts £500,000 to Brother C

• Brother C gifts £500,000 to Sister A



or is it possible to simply cut out Sister C. i.e.

• Sister A gifts house to Sister B

• Sister B gifts £500,000 to Sister A


Thanks in advance for any responses.

Ben

bd6759
Posts: 2890
Joined: Sat Feb 01, 2014 3:26 pm

Re: Stamp Duty and Gifts

Postby bd6759 » Mon Feb 12, 2018 5:35 pm

In both scenarios sister A is disposing of her interest in a house to sister B in exchange for £500,000.

Sister A will pay CCT on the amount by which the market value exceeds the probate value.

Sister B will pay Stamp Duty Land Tax based on consideration of £500,000.

Sending money on a circuitous route does not change that simple fact. You can add as many artificial steps as you want: but the simple fact will remain the same.

Ben951753
Posts: 3
Joined: Sun Feb 11, 2018 12:47 pm

Re: Stamp Duty and Gifts

Postby Ben951753 » Tue Feb 13, 2018 5:20 am

Thanks for the reply.

What I don’t understand is:

If Sister A is gifting her house to Sister B.

No stamp duty is due because the house is being gifted.
No CGT because the house is sister A’s main residence, has just been inherited and
market value = probate value.

And why does Sister B have to pay stamp duty?

Her GIFT to Brother C has nothing to do with Sister A. No formal agreement has been made between any of the siblings. It is a completely independent act.

So, if Sister B chooses to GIFT Brother C £500,000, the only tax I can see which may apply is IHT if she dies within 7 years.

Ben951753
Posts: 3
Joined: Sun Feb 11, 2018 12:47 pm

Re: Stamp Duty and Gifts

Postby Ben951753 » Tue Feb 13, 2018 6:17 am

Also, as I understand it.

Stamp duty is payable by the receiver of the GIFT, but only if the property has a mortgage attached to it.

This property has NO mortgage.


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