Getting the property back out of my estate?

Getting the property back out of my estate?

9:56 AM, 27th June 2022, About 2 years ago 22

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In 2009 my son-in-law got into financial difficulty and I repaid all debts and the mortgage on their property and took ownership of their home allowing them to remain in the property rent-free. At the time I paid 209k for this property.

I now wish to get the property out of my estate and gift the property to my daughter. This is valued today at approximately 400k. I understand if I gift this property there is likely to be a CGT liability on the increase in the value of the property between the 2009 acquisition and today’s date namely a taxable profit of 191k.

I wondered if there is a legal way to eliminate or indeed considerably reduce the tax liability on this gift. We have explored the costs and implications of putting the property into a trust and also considered leaving it in our estate neither have worked out as a Realistic option and would end up costing more.

The gifting would be our favourite route but we would like to reduce the tax liability. We would welcome any suggestions.

Many thanks

David


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Comments

CMS

12:13 PM, 6th July 2022, About 2 years ago

Reply to the comment left by Whatwoulda Surveyorknow? at 03/07/2022 - 12:08
Hi,

For 12 years, if the daughter has been paying rent she could only claim an Assured Shorthold Tenancy albeit one that would be difficult to end with no written terms.

If you want to try and argue that she has a lifetime interest in the property then I would think that for CGT purposes the HMRC would see the granting of the life interest (whenever that would be considered to have happened i dont know) to be a disposal for CGT purposes as it is an interest that devalues the asset albeit not for the entire value of the property but i would think it would be a fair bit. Also if you died within 7 years you would caught by the Lifetime Gift rules for IHT.

You could do it this way but i think you would end up still paying tax at both ends potentially. I might be wrong.

Sorry, Charles

CMS

12:15 PM, 6th July 2022, About 2 years ago

Reply to the comment left by Charles Dowding at 04/07/2022 - 09:02
Yes you can do this. The TR1 relates to the legal title whereas the declaration of trust relates to the equitable title.

If you do have a declaration of trust though you have to register a Form A restriction against the properties legal title.

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