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Where Taxpayers and Advisers Meet

Capital Gains on gifted property

Nell
Posts:3
Joined:Sun Jun 26, 2022 2:20 pm
Capital Gains on gifted property

Postby Nell » Sun Jun 26, 2022 2:37 pm

My sister and I inherited our parents property 25 years ago. We own it as tenants in common. It has been rented out for the whole 25 years and we have paid tax on profits.
We want to sell the property now but will be faced with large CGT bill as whole value of property has risen from £60k to £300k in that time.
If we each gifted half of our share to our respective spouses a month or so before sale (i.e. there would be no 'gain' in the value of the asset over a short period) then I think I'm right in saying we would lower our CGT bill considerably as each spouse would have no gain and our portion of the total gain is halved?
If I'm right could my sister and I go one step further and each gift our total share of the property to our spouses a few months before sale so no gain in value and therefore pay no CGT whatsoever? It seems too good and simple to be true!

bd6759
Posts:3785
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains on gifted property

Postby bd6759 » Sun Jun 26, 2022 5:18 pm

If you gift an asset to a spouse, the gift is deemed to be at at value that gives neither a gain nor a loss.

So you have an asset that has an acquisition value of £30K.

You want to gift it to your spouse. What value should be attached to that disposal so that there is neither a gain nor a loss?

When you work that out, you’ll see why your ruse won’t work.

But it will reduce the overall taxable gain because your spouses can use their annual exemption and rate bands when the property is sold, so gifting an appropriate share is sensible planning.

Nell
Posts:3
Joined:Sun Jun 26, 2022 2:20 pm

Re: Capital Gains on gifted property

Postby Nell » Sun Jun 26, 2022 7:32 pm

Thank you for that response.

So, if I understand correctly, the value of the asset gifted is deemed to be the original value of the asset when acquired? Not the value at time of gifting?

bd6759
Posts:3785
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains on gifted property

Postby bd6759 » Sun Jun 26, 2022 11:07 pm

Yes. That is the usual result.

Nell
Posts:3
Joined:Sun Jun 26, 2022 2:20 pm

Re: Capital Gains on gifted property

Postby Nell » Mon Jun 27, 2022 11:45 am

Thank you again - thats very helpful.


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