Transfer property to minimise CGT?

Transfer property to minimise CGT?

7:36 AM, 1st March 2021, About 3 years ago 12

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If Sunak changes CGT rules what is the best way to minimise CGT?

1. I purchased a rental property for £85k jointly a number of years ago in cash.
2. It is worth £125k now (£40K gain).
3. CGT allowance is £12,300, so joint is £24,600.
4. Can I sell the rental property for £85k + £24,600 = £109,600, which is below market value without issue to pay zero CGT and defer the rest to the company whenever it is sold? My Ltd company can pay me cash (as it has the reserves) and I understand there is currently no stamp duty.
5. Is there a tax implication I would fall foul of and more GGT or stamp duty would be charged?
6. Could my company sell it back on 7th March 2020 (me/wife)
on 10th April at £109,600?
7. Can I then sell it back to the company on 20th April for £125k (no stamp duty again, if Sunak extends).
6. Is there a better solution to take the CGT gain tax-free?

Yes, it is a snide and crafty thought. Is it legal?

Mark


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Comments

Olls63

10:16 AM, 6th March 2021, About 3 years ago

Reply to the comment left by Falco van der Gragt at 06/03/2021 - 09:14
Yes and yes.
If it is beneficial for 1 partner to be taxed on the rental income you can prepare a simple declaration of trust; stating the beneficial interest between them, and send form 17 to HMRC.
This split will also apply to CGT

Paul Baker

11:22 AM, 11th March 2021, About 3 years ago

Hi Falco,
You can gift or transfer part or all of the capital value of the asset between spouses without any CGT arising but only if married (or civil partnership). All that is happening though with the capital gain is that it is only really being postponed until the time comes when the asset eventually passes to someone other than the couple, because if Mr bought it at £100k and transfers it to Mrs ten years later when it is worth £300k, HMRC will simply treat Mrs as having acquired it at £100k. You don't therefore lose the gain but you can plan more efficiently as you can utilise 2x CGT allowances if in joint names when you come to dispose of it or you may want to gift/transfer an unequal percentage to the spouse if for example one is a non-taxpayer & the other a high rate taxpayer. The other way to avoid CGT currently is just hang on to it until you die(!) when the CGT will disappear but the asset will be assessed for IHT.

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