Transfer of part of let property to son

[dotto]

Your advisers have already informed me that it would be sensible to dispose of part of my let property before the next tax year because of the changes in taper relief. I would like to transfer half of the property to my son before April 2008 as he can't afford to buy it from me. I have taken into account the capital gains tax for myself now and when we sell and for him when we sell. What I would like to know is, is the position the same whether I sell him half or simply transfer half to him. Does transferring the half pose any problems that you are aware of with the IR. Thank you for any advice.

[Peter D]

A transfer/Gift is the same as a disposal for GCT purposed as this will be based on the Open Market Value. If SDLT is involved then that is based on the actual consideration so a gift would not trigger this although a mortgage on the property would be a complication. Once he own a share then he will have to declare the shares rental income/profit to HMRC and of course there will be an accruing CGT liability on your son's share if the property grows in value in the future. Regards Peter

[wamstax]

On what basis have you been advised to dispose of your let property prior to 5th April 2008 as against after that date when it is envisaged that you may pay 18% CGT tax on the crystallised gain as opposed to whatever effective rate will apply in this tax year?
regards
bill@wamstaxltd.com

[dotto]

Thank you for responding. I currently own 2 rented properties. One flooded in June and has been refurbished and I have decided to sell it. It has a 3 year fixed mortgage which I would like to transfer to my second property to avoid penalty charges which are quite high. There will be no capital gains on this property as I have not owned it long. I have had the mortgage for nine months.

My second property which is the one I referred to in my original question has no mortgage currently. I have owned it for eight years in January 2008 and will be eligible for 30% taper relief and I assume my full capital gains allowance on the half I will sell or transfer to my son before April 2008. I have phoned the mortgage company who have confirmed the mortgage can be ported and can be put into mine and my son’s joint names with no penalty charge (my son becoming joint owner of the property at the same time). We will more than likely sell the property in 2 years time when the mortgage expires. I have not been very ‘savvy’ as you can see with my tax affairs and am keen not to make any further mistakes as I have made major blunders over the past 10 years. Are there any obvious flaws in my current thinking.
Thank your advice so far and any further advice you are able to offer.

[rap123456789]

hello peter what does SDLT mean