What is the best way to gift properties to family?

What is the best way to gift properties to family?

10:39 AM, 30th September 2021, About 2 weeks ago 9

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Hi, I would like to gift one property to each of my two adult daughters from my portfolio. Neither property has any mortgage against it.

One property is a purpose-built flat with a long lease remaining, and the other is a freehold shop with a flat above rented on an AST.

I would appreciate any advice on the best way to gift them and minimise any tax implications.

Many thanks

Alice



Comments

by Neil Patterson

10:43 AM, 30th September 2021, About 2 weeks ago

Dear Alice,

My colleague Alex commented: If there’s no capital gains to worry about, then it’s easy. However, why would you want to do this? All it does is saddle your children/grandchildren with the same IHT problems that you and your children have.

Unless you're gifting them to your children as their PPR you need to think again.

by Mark Alexander

0:18 AM, 1st October 2021, About 2 weeks ago

Hi Alice

Have the properties increased in value since you acquired them?

Can you tell us a bit more about your circumstances and what it is that you are trying to achieve please?

Have you considered a family Partnership and bringing your daughters into the business that way?

Please see https://www.property118.com/ebook

by Alice Bock

13:03 PM, 1st October 2021, About 2 weeks ago

Reply to the comment left by Mark Alexander at 01/10/2021 - 00:18
Hi Mark, the properties have increased in value as I have owned them for several years. I would like ultimately to set up an LLP and hopefully then incorporate the remaining 5 properties - 3 are in a Ltd co presently, one of which I was thinking of gifting. I am hoping to minimise my IHT and also give my daughters an income from the properties whilst they are young enough to need it for school fees etc. Any advice on the best way forward would be appreciated.

by Judith Wordsworth

13:25 PM, 1st October 2021, About 2 weeks ago

Following as interested to do similar for only daughter who is living in my ex rental flat at peppercorn rent.
Value has increase considerably since purchase £30,000 in 1994.

by Ken Clark

13:25 PM, 1st October 2021, About 2 weeks ago

I have just "sold" one of my BTL properties to my daughter, at full market value, with a tenant in situ. My financial adviser found a good BTL deal with Coventry's Godiva for her, and they did not even ask if she was employed or had any income!
I gifted the deposit and paid all fees and taxes.
My understanding is that If you give assets away and you survive for at least 7 years then all gifts are free and avoid inheritance tax

by Mark Alexander

13:33 PM, 1st October 2021, About 2 weeks ago

Reply to the comment left by Ken Clark at 01/10/2021 - 13:25
May I ask how much it cost you in Capital Gains Tax, Stamp Duty, legal fees, lenders fees etc. it cost you to do that and what the benefit was?

by Mark Alexander

13:48 PM, 1st October 2021, About 2 weeks ago

Reply to the comment left by Alice Bock at 01/10/2021 - 13:03
Hi Alice

You would need to book a Tax Planning Consultation to discuss that because we would need to get into a lot more personal detail before we could make any bespoke recommendations.

A public forum is not the right place for that.

by Glyn Jenkins

16:53 PM, 1st October 2021, About 2 weeks ago

Gifting them leasehold flats ,1 above a commercial premeseis? Sell them both,and buy something Freehold and gift that.
Leasehold is grief, the one above a commercial premeseis is even more so.

by Ken Clark

16:43 PM, 4th October 2021, About 2 weeks ago

Reply to the comment left by Mark Alexander at 01/10/2021 - 13:33CGT yet to be worked out.
Total legal fees, buying/selling + stamp duty £5750
Gifted deposit was £35000
Zero lenders fee but 0.2% higher than TMW's rate. However seems that TMW no longer allow a family gifted deposit which is why my broker went to Godiva (Brokers fee £125)
I have done it this way as my interest only mortgage was coming to an end and rather than take another mortgage out "sold" it to my daughter. The benefit to her is clear and the benefit to me is that after paying all costs I pocket £55k (less CGT)
What is interesting is that despite the mortgage now being more than double the previous one, there is only £25 per month difference in the repayments.
I will repeat this with my children as and when my BTL mortgages end, and hope I live longer than seven years!


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