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Where Taxpayers and Advisers Meet

Can we do this?

111473
Posts: 1
Joined: Sat Aug 17, 2019 2:19 am

Can we do this?

Postby 111473 » Sat Aug 17, 2019 2:54 am

Hello,

We are property owners and are purchasing our new main home in a couple of weeks. We intend to live in our current property whilst carrying out renovations to the new home and then rent it out. So will be paying the higher stamp duty tax.

Is it worth, once we have got the first property ready for rent, gifting it to my Dad (it is owned outright). To claim back the additional stamp duty cost (around £15,000). Is he then able to gift it back to us (subject to CGT) or is there a time limit to stop these types of transactions?

I understand there would be IHT implications under the 7 year rule, But is there anything else I should be considering?

Is this a crazy idea? Just to add Dad has had several inheritances which have been past to me. He is my only surviving relative and I have no siblings.

jerome.lane
Posts: 34
Joined: Mon Aug 12, 2019 8:41 am
Location: Camberley, Surrey
Contact:

Re: Can we do this?

Postby jerome.lane » Mon Aug 19, 2019 10:27 am

This would fall squarely within various anti avoidance provisions and HMRC are likely to open an enquiry once they become aware of the events. Where the expectation is that you will receive the property back (it's not really a gift is it?), then you basically have a bare Trust arrangement where your father is the legal owner of the property whereas you still consider yourself the beneficial owner. These arrangements will be caught; see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09815.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203


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