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Where Taxpayers and Advisers Meet

CGT Buy to let to Cousin

Connor0431
Posts:5
Joined:Fri Jan 31, 2020 11:29 pm
CGT Buy to let to Cousin

Postby Connor0431 » Fri Jan 31, 2020 11:35 pm

Hi
I have a buy to let property which I bought for £67500 and I remortgaged two years ago and have £80000 left on the mortgage and property was valued at £115k then.
I’m now looking to pass this house onto my cousin with the mortgage as long as she passes the lending criteria by the mortgage provider.
My question is what are the CGT implications on this? Do I still have to pay it? If so is it the tax on the profit from
£67.5K to £115k?

Thanks in advance.

Lee

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: CGT Buy to let to Cousin

Postby AdamS93 » Sat Feb 01, 2020 4:20 pm

Yes. A gift is treated the exact same as if you sold it, using open market value at the date of gift as the disposal proceeds.

The mortgage is irrelevant. The gain is 'proceeds' (as above) less original cost.

Connor0431
Posts:5
Joined:Fri Jan 31, 2020 11:29 pm

Re: CGT Buy to let to Cousin

Postby Connor0431 » Sun Feb 02, 2020 10:53 am

Thanks for the quick response, I thought that would be the case.

jerome.lane
Posts:237
Joined:Mon Aug 12, 2019 8:41 am
Location:Sandhurst, Berkshire
Contact:

Re: CGT Buy to let to Cousin

Postby jerome.lane » Mon Feb 03, 2020 11:18 am

The CGT can be avoided by establishing a Trust arrangement and making appropriate hold over claims. This isn't always attractive especially if the property is likely to be held for a long time and increase in value to fall within ten year anniversary IHT charges. However, as a general estate planning option, it can be worth considering.
Jerome Lane
Tax Adviser
Telephone: 07943 005902

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT Buy to let to Cousin

Postby maths » Wed Feb 05, 2020 6:40 pm

If you are gifting the property albeit charged then the assumption by the recipient of the mortgage may give rise to a SDLT charge if the property is not the only property owned by the recipient.


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