How do we transfer ownership of rental house to my 18 year old son?
9:37 AM, 2nd November 2020, 5 years ago
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We have an unencumbered rental property which we are considering transferring to our son when he turns 18 next year.
What would be the most straightforward and tax efficient way of conducting this process?
Would Stamp duty be chargeable at this stage?
The value of the property has doubled over an 8 year period since we purchased it.
Your thoughts on this would be gratefully appreciated.
Mark
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Member Since January 2016 - Comments: 235
11:53 AM, 4th November 2020, About 5 years ago
A variation on this theme was discussed back in Jan 2020 – see:-
https://www.property118.com/do-i-pay-cgt-if-i-sell-to-a-friend-at-minimum-value/
There you will see that Silversurfer2017 has gifted his BTL property to his son over a period of years utilising his annual CGT allowance, as suggested by Adrian Jones on the previous page. After this current tax year I and my wife will be looking to do the same for our sons as we already have 2 unencumbered properties, and more will be mortgage free as we progress though the next 10 years. I have also looked into retaining the income without falling foul of gifts with reservation (GWR) rules. For anyone looking to do the same, this is an excellent starting point :-
https://www.propertysecrets.org/index.php/2015/01/12/giving-away-an-investment-property-interest-and-keeping-rental-income/
For those that struggle with the maths, when calculating your annual gifted proportion, do not forget that CGT is based purely on the gains in value, not the current overall value of the property. A simple example would be purchase £200k, current value £300k, capital gain is £100k. A married couple have a combined £24.6k annual CGT allowance so can gift the property over a period of 4 years (give or take).
HUGE CAVEAT – please treat the above as just an option to consider as part of your planning. I am not an expert – please take expert advice before proceeding.