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Where Taxpayers and Advisers Meet

Income/CGT/Stamp duty implications of gifting 50% of a property

MarkJT
Posts: 1
Joined: Sun Sep 15, 2019 9:26 pm

Income/CGT/Stamp duty implications of gifting 50% of a property

Postby MarkJT » Sun Sep 15, 2019 9:29 pm

Hello

I'm trying to understand any tax implications, in terms of stamp duty, income tax and CGT on the following scenario.

I am retiring shortly, and my wife is also stopping working. We will have some income from BTL property. I will be a basic rate tax payer, but my wife's income will be about £5k below her personal tax allowance. I inherited a property from my parents in 2011. It was valued at the time at £195k. It's current value is 350k. For the last year it has been rented out, we hope to continue to renting it out. It current has a £210k BTL mortgage. In order to minimise our tax liabilities what is our overall best option, and what costs are involved? The options I know of are:

1. Simply get my wife to gift her £1250 tax allowance to myself?
2. Gift 50% of the BTL property to my wife so that she can use her full tax allowance and which may help with CGT when we sell the property? I believe that some Stamp duty might need to be paid with this option?
3. Something else?

Many thanks

Lee Young
Posts: 2667
Joined: Wed Aug 06, 2008 3:26 pm
Contact:

Re: Income/CGT/Stamp duty implications of gifting 50% of a property

Postby Lee Young » Fri Oct 11, 2019 5:47 pm

There are no CGT implications on gifts between spouses, and also no SDLT issues, assuming liability for the mortgage stays were it is (if you want the mortgage to be shared, this will involve a transfer of equity and SDLT may well then be payable). The main consideration is income tax, and it makes sense to share the property and therefore the income, in such a way as to minimise the annual income tax liabilities. You may as well ensure that at least another £5000 of income goes to your wife to mop up her personal allowance.

Assuming the mortgage is left alone, this can be done by a declaration of trust and should only costa few hundred pounds if you seek advice on it.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701


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