Old BTL property

[JAY123]

Hi guys,

Just need some advice.

I am 65 years old and retired. I have an old property in my name that I bought for £25k back in 1990 that we as a family lived in for 11 years until we moved to our current house in 2001. The value of the property is around £140k now and has been let out for the last 11 years.

I want to pass this old property on to my son and his wifes name, can I simply just add them on to the deeds of the property and not worry about any tax issues or can I just transfer the property in to there names? What tax issues do I/my son and his wife have to think about? I am a little confused about all of this.

Any advice would be much appreciated.

Thanks

Jay.

[robbob]

There is potential chunky capital gains tax due if you dispose of this house or part of this house.
The tax rules are changing 6/4/2020 - so its likely that any disposal after that date will result in materially increased capital gains tax (unless we have change from current plans in march budget).
Basically from 6/4/2020 your lose the very valuable letting relief and also have reduced ppr relief from 18 months down to 9 months.
this is presuming its a normal disposal by you subject to gain being taxed based on current market values.

So its probably worth taking specific advise in this regard - i would guess if you need to do transfer and must take the tax hit , then doing so before 6/4/2020 might be your best bet - from a tax efficiency point.

There may be / probably are other "fancier" options in this regard which may be available to transfer assets to others without this problem - i will leave it for others to comment on any more tax efficient ways to transfer property to others without triggering default capital gains tax.

[maths]

A back of the envelope calculation gives rise to a CGT charge on your part of around £3,600 or possible £5,600.

The fact that you are gifting the property does not prevent a CGT charge arising.

The above figures assume a disposal on or before 5 April this year; thereafter as Robbob points out your liability will increase quite a bit.

From the CGT perspective it would make sense to continue to hold it and pass it on under your will; then no CGT charge arises.
For IHT purposes, it may still make sense to leave it by will; this will depend upon if you own/live in another property and the aggregate value of your estate and if you are married.