Any CGT to pay in gifting assets to aviod IHT?

[anamou]

i am 64 and a widow. i have several property's that i now wish to give to my son and daughter. In total about £500k in value. if i transfer the property's to them will i pay CGT? i also have a share portfolio of about £75k will i pay CGT there too?

further to this, my daughter lives with me in the house i own. as the house we live in is also her main residence could i transfer half the ownership to her, once again will i pay CGT and will the half of the value i transfer to her come under the 7 yrs IHT rules? this property is valued about £235k

[accountant@uktaxshop]

I answer to your questions; yes you would normally be paying some CGT on the transfers of property and shares to your children. There are a number of reliefs available which may reduce these gains.

Any transfer of your own home would not be subject to CGT, although there would be a stamp duty implication, and the 7 year rule would apply. However given the recent rulings, this is becoming a "hot topic" and caution is needed.

Given the fall in the value of shares in recent years it could be there is no gain after reliefs, although I would need to look at the numbers to compute any gains. In theory if there where losses, these could be offset against any gains on the property.

However I would strongly advise you to seek some professional legal planning to minimise your potential IHT and CGT. If you would like to give me a quick ring or email, I can provide a good contact who does not charge the earth for a solid planning service.

If you try to DIY in this area it can get very expensive.

Regards
James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

[timbo33]

Anamou,

If you are happy to give up the properties entirely and any income derived from them, gifting into a discretionary trust achieves some CGT benefit by application of holdover relief. The gain is held over until the Trust or it's beneficiaries sell the property and realise the gain.

You can only gift £255,000 into a discretionary trust in your lifetime without incurring an immediate 20% IHT liability and would need to survive 7 years as the gift is a potentially exempt transfer. After 7 years you could gift another £255,000 and so on...

There is also the spectre of periodic charge which is a reduced IHT on the trust assets in excess of £255,000 (currently) every 10 years, but is negligible in relation to the IHT and CGT savings.

Speak to a GOOD solicitor and IFA.