3% Stamp Duty surcharge if gifting property to son who owns home in Spain?

by Readers Question

9:03 AM, 17th January 2018
About 11 months ago

3% Stamp Duty surcharge if gifting property to son who owns home in Spain?

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3% Stamp Duty surcharge if gifting property to son who owns home in Spain?

My son lives in Spain and owns a property there. I recently downsized and moved to a property I already owned (it was let).

I would like to gift my son a small Buy to Let property in London, which I could manage while I am still able to, and then hopefully save on inheritance tax, if I manage to live at least 3 years.

I read in last Sunday’s Sunday Times (14 January 2018) that if you own a property abroad (even a holiday home), you have to pay the additional 3% stamp duty land tax, if you buy your first property in the UK.

Has anyone come across this rule?

There seems to be quite a lot of uncertainty about the tax rules, so it is hard to know if this is true.

Many thanks

Londoner 43



Comments

Neil Patterson

9:10 AM, 17th January 2018
About 11 months ago

Yes my understanding is if you already own a home anywhere in the world and are buying another in the UK even if it is the first UK property you will pay the additional 3% Stamp Duty Surcharge.

Have you considered gifting him the beneficial ownership? Please see our tax planning page >> https://www.property118.com/tax/

However, I obviously recommend you seek professional and qualified estate planning advice.

money manager

9:34 AM, 17th January 2018
About 11 months ago

I have encountered several overseas purchasers who rent their overseas home.

Charles de Lastic

11:13 AM, 17th January 2018
About 11 months ago

Aside from being a landlord, I specialise in IHT advice.
Although your question is around stamp duty you should understand that unless the property value is in excess of £325,000 there will be no IHT saving after 3 years as only gifts in excess of the Nil rate band have taper relief applied. The first £325,000 of the gift will take 7 years to come out of your estate.
In addition, if your son gets married and subsequently divorced he could lose up to 50% of the value of the property. You could consider using trusts instead and also ensure you get good exprienced inheritance tax advice.

Londoner 43

23:56 PM, 18th January 2018
About 11 months ago

Reply to the comment left by Neil Patterson at 17/01/2018 - 09:10
Many Thanks. I'll look into it.

Londoner 43

0:08 AM, 19th January 2018
About 11 months ago

Reply to the comment left by Charles de Lastic at 17/01/2018 - 11:13
Thanks. I am aware that it takes 7 years for a gift to be totally outside my estate, but perhaps I don't quite understand how the taper relief works. Even a small flat in a decent area of London will cost more than £325,000, so some taper relief would be due. As my total estate will be in excess of 1 million, I clearly need good advice regarding inheritance tax. (There is no risk of my son divorcing, as he is not married. He will be 50 this year and has told me that he will definitely have a pre-nuptial agreement, should he ever get married.)


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