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Where Taxpayers and Advisers Meet

Which Taxes Payable on Commercial Property Transfer?

Joined:Fri Mar 17, 2017 12:12 am
Which Taxes Payable on Commercial Property Transfer?

Postby Tingly » Mon Jun 28, 2021 6:00 pm

Good Afternoon,

My husband owns 50 per cent of a small motel with his sister, which they lease out...they dont actually run it.

As he pays tax on the income, and I only receive a tiddly bit of income from savings interest 😀, and a tiny bit of self employment, and i do not use my personal allowance, he is thinking of changing the ownership of his half of the property (about 200k ), or part of it, in order to use up my personal allowance.

I would then become an ‘owner’ in title , and dont know if i want to have the responsibility of this..not that theres much running, but it seems a big thing.

Q1. Is there anyway i am permitted to receive some of the income , without going the ‘whole hog’ as it were? Aome kind of fancy trust instrument?

Q2. Also if i did go ‘whole hog’, and if my husband died and i sold it, am guessing i would get hit with full cgt if i sold it, apportioned in a way as if i had owned it from the same time that he bought it...which was years ago, so it would be a huge chargeable gain...? Is this correct?

Can anyone shed light please?

Many Thanks

Joined:Fri May 16, 2014 3:47 pm

Re: Which Taxes Payable on Commercial Property Transfer?

Postby AGoodman » Tue Jun 29, 2021 2:16 pm

Nothing fancy required, just a simple declaration of trust that he holds his share for the two of you in shares of x/y. Bear in mind that you would need to register the trust on the newly expanded trust register by March 2022.

This is also the only way to do it without involving his sister in the transfer.

You would pay 20% CGT on any gains (at current rates) - you'd be paying the same tax that he would if he sold the property himself (while still alive). You'd be paying from the proceeds so it's no great imposition. This is the situation whether you become a legal owner or just a beneficial owner under a trust deed.

The status quo is only better from a CGT perspective if your H is likely to die first because if he leaves it to you that effectively wipes out the gains.

Joined:Fri Mar 17, 2017 12:12 am

Re: Which Taxes Payable on Commercial Property Transfer?

Postby Tingly » Wed Jun 30, 2021 11:02 am

Thankyou for the advice. Appreciated.

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