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Where Taxpayers and Advisers Meet

Tax efficient way to gift commercial property to spouse

Tingly
Posts: 25
Joined: Fri Mar 17, 2017 12:12 am

Tax efficient way to gift commercial property to spouse

Postby Tingly » Wed Jul 03, 2019 5:44 pm

I am a 75 year old male, with a current, valid will , a second wife who I have been married to for 30 years and 3 grown up children
We are sensible with money having both worked hard to built up assets, however their is an age gap with my wife, and therefore some of these assetts were gained before I met her, although she has more than contributed since our marriage.

I recently gifted my children substantial amounts to help pay for necessities, unfortunately all I managed to do was fill a spending gap and the money was wasted on luxuries, instead of attending to the necessities they said they needed it for,

My aim is to ensure my wife of 30years receives the whole of my estate, including other assetts , upon my death, without contest from my adult children from a previous marriage to whom i have already gifted substantial amounts. If we die ‘together’ they can have it my 3/4 of the estate (my will reflects this) as it wont matter then

I have as yet an uncrytallised pension ( i have completed an expression of wishes)
and two commercial properties held in my personal name (not ltd).
They are both let..one is a residential buy to let, the other a small guest house/hotel

I have looked at 3 ways of achieving this goal.

A. Do a transfer of equity whilst i am alive....upside...we know where we are. Downside...cgt later for my wife.

B. Leave in will..(which I already have)....upside , no cgt to pay, downside...wills are contestable these days , more so than ever, as one of my good friends recently discovered, although I have had mine thoroughly checked and added a statement of wishes just in case.

C. Is there a third way? A trust or something?...i dont know the upside or downside of this, so was hoping you might tell me

Many Thanks

pawncob
Posts: 4352
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Tax efficient way to gift commercial property to spouse

Postby pawncob » Wed Jul 03, 2019 6:53 pm

A gift now avoids any doubt as to your intentions, and no CGT involved. It also avoids any potential disputes re. B.P.R. (if applicable)
It does, however, waste your IHT allowance on death (unless you reserve enough assets to use this). If you only will estate to wife, it is of course, irrelevant.
With a pinch of salt take what I say, but don't exceed your RDA

Tingly
Posts: 25
Joined: Fri Mar 17, 2017 12:12 am

Re: Tax efficient way to gift commercial property to spouse

Postby Tingly » Wed Jul 03, 2019 7:15 pm

Hi there
Thankyou very much for the reply
Yes, I must say, I like the idea of the certainty.
I am leaving everything to my wife anyway so no IHT . (Not being horrible but gave kids plenty and they have been reckless)

However, dont understand the part about no cgt
I know there wont be now, but if my wife later sells the property, and we have 50/50 ownership, (lets say its a 100k gain to keep it simple) am I right in thinking she inherits 50k from me (so no cgt on sale of that bit) which will leave a gain of 50k for her (-allowances etc) to pay cgt on IF she sells the property?

someone
Posts: 383
Joined: Mon Feb 13, 2017 10:09 am

Re: Tax efficient way to gift commercial property to spouse

Postby someone » Wed Jul 03, 2019 9:19 pm

I know there wont be now, but if my wife later sells the property, and we have 50/50 ownership, (lets say its a 100k gain to keep it simple) am I right in thinking she inherits 50k from me (so no cgt on sale of that bit) which will leave a gain of 50k for her (-allowances etc) to pay cgt on IF she sells the property?
If you already own it 50/50 as tenants in common then converting it to joint tenants would mean your wife would get it outside of your will.

Tingly
Posts: 25
Joined: Fri Mar 17, 2017 12:12 am

Re: Tax efficient way to gift commercial property to spouse

Postby Tingly » Wed Jul 03, 2019 9:29 pm

Hi, no we dont jointly own it now. Its in my name, currently in my will for her, but as I say, i was looking for absolute certainty she would get it on my death.
So was looking at gifting now (50/50 joint tenants,)and tax implications for her if she sells after my death , and/or possibly putting into trust for her...but was unsure what this would mean tax wise.

Tingly
Posts: 25
Joined: Fri Mar 17, 2017 12:12 am

Re: Tax efficient way to gift commercial property to spouse

Postby Tingly » Wed Jul 03, 2019 9:40 pm

Ps. If i transfer equity (on a 50/50 basis), its a buy to let property with no mortgage , and no money changing hands, am i right in thinking no sdlt?

SteLacca
Posts: 446
Joined: Fri Aug 07, 2015 2:17 pm

Re: Tax efficient way to gift commercial property to spouse

Postby SteLacca » Fri Jul 05, 2019 3:08 pm

If you gift the property to your wife she also acquires your history for tax purposes, so base cost for CGT purposes. This is unavoidable with a gift.

As you have identified, bequeathing the property to her would mean her base cost is probate value for CGT purposes, but leaves you with the concerns you already have regarding a contested will.

Tingly
Posts: 25
Joined: Fri Mar 17, 2017 12:12 am

Re: Tax efficient way to gift commercial property to spouse

Postby Tingly » Fri Jul 05, 2019 10:42 pm

Thanks Stellacca

I am just wondering whether some kind of lifetime trust or some other trust might be the way forward
Does anyone know?


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