Receiving a property gift – What to do next and how to do it?

Receiving a property gift – What to do next and how to do it?

14:01 PM, 11th October 2021, About 9 months ago 2

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Hi, My parents will be gifting a property to me in the not too distant future, and I just wanted to gather some advice regarding best practices moving forward with the aim of growing a buy-to-let portfolio.

I am 26 years old and understand somewhat the benefits of doing this within a corporation however was wondering if it was possible to receive the gift directly into the company and if so what are the benefits of doing this? Would any benefit outweigh the negatives of receiving the gift in my personal name, only then to incorporate (stamp duty etc)?

My thinking was to receive the gift in my personal name, refinance and then transfer it (paying any applicable stamp duty) with the view to loaning the company capital for future purposes. Meaning I’d be able to extract future income tax free to the value of the loan rather than receiving the gift directly into the company and being taxed on any extraction of funds which I would need to purchase my own personal purchase as a first time buyer?

Thanks!

PS



Comments

Mark Alexander - Founder of Property118 View Profile

14:45 PM, 11th October 2021, About 9 months ago

OK, can I ask a few questions first please?

Is there a mortgage outstanding on the property? If so, what is the value of the property and what is the mortgage balance?

What type of property is it?

Is the property let?

Have your parents ever lived in the property?

When did they buy it?

Are your parents UK resident?

How much did they pay for it?

Several of the questions above are to determine Capital Gains made by your parents and the CGT payable within 30 days of making the gift.

There are many more questions to be asked in regards to gifting the property to you or your company too. I strongly recommend you book a Tax Consultation with us before proceeding, because any responses on our forum will not constitute insured professional advice.

JohnsonD

17:33 PM, 25th October 2021, About 8 months ago

Your parents need to take some advice there are lots of potential tax implications of such a transfer. If the property is unencumbered the best way to transfer the property is likely via a discretionary trust to rollover any capital gains on the property. The trustees then may decide at a later date to appoint the property out to a beneficiary but I doubt it would then be worth your while selling it to a limited company. Dependant on your circumstances you'd probably just keep hold of it personally and buy future properties in a ltd co stucture, or the trustees may decide its better to keep it held in the trust with you receiving rental income from it.

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