Removal of taper relief on let property

[dotto]

I shall have owned a flat for 8 years in Feb 2008 and had decided to keep it for 10 years to take advantage of taper relief. Purchased flat for £50,000 - no mortgage. Now the taper is to be abolished I am thinking of selling half the flat to my son in March 2008 for £65,000, to take advantage of current taper relief of 30% and capital gains allowance of £9,000. This would keep my income for this year under the 40% tax bracket. If my son and I then sell in 2 years time for say £150,000, I will have further tax to pay (taking into account the remaining half of the original £50,000 paid for the property)at 18% but my son will not incur any tax if the capital gains allowance has been increased to £10,000. Can you see any major flaw in this. Your help would be much appreciated.

[Peter D]

Yes that is a good way forward. Your tax bill will drop from a potential £20,355 to around £8,700. The only crystal ball stuff is, is the property going to go up in value by 2010. I had a meeting last week with a Landlords group that are taking similair actions. I assume your wife is not an owner with you. Regards Peter

[dotto]

I am a divorced female so no man to worry about! It is unlikely that the property will increase substantially in value by 2010 but thank you for pointing this out. I will work out figures just in case. I am very grateful for your response.

[eagle_eyes]

pls be aware tax office will most likely to value the house themself at the point of sales for CGT purpose.

[dotto]

Thank you for your response. I shall be doing this to reduce my tax liability with regard to the changes next April (taper relief). I will sell half of the flat to my son for the correct market value so would not be worried about the IR valuing it as well. At the time of selling the flat in the future, this will be at the market value at the time. Does this still sound like a reasonable move.