transferring property ownership over time

[noshow1]

Hi All,

First time posting on the legal board.

I have a freehold property with no mortgage on it and I would like, over time, to gift it to my son and daughter and get rid of any Capital gains tax liability. What is the best and least cost way to do this?

Do I go to a solicitor and get him to add their names as tenants in common say with a 10% share each in the property and each tax year gift them a further 10% until its all gifted away? Do I have to use a solicitor each year to do this? It seems that this could cost me £500 each time I do this so the final bill will be £2,500.00

Many Thanks

Noshow1

[Lootman]

I have a freehold property with no mortgage on it and I would like, over time, to gift it to my son and daughter and get rid of any Capital gains tax liability. What is the best and least cost way to do this?

CGT is due on any gifts to a non-spouse, as if the asset were being sold at market value.

So it seems to me that your idea will only work if each gift entailed a capital gain of less than the annual CGT-free allowance. Which might take a long time.

The cost basis of your home is uplifted to current market value at the point of death, so no CGT would be due in that scenario. There would be IHT potentially due however, which is often a bigger reason to make gifts to others.

[Clitheroekid]

I have a freehold property with no mortgage on it and I would like, over time, to gift it to my son and daughter and get rid of any Capital gains tax liability. What is the best and least cost way to do this?

Do I go to a solicitor and get him to add their names as tenants in common say with a 10% share each in the property and each tax year gift them a further 10% until its all gifted away? Do I have to use a solicitor each year to do this? It seems that this could cost me £500 each time I do this so the final bill will be £2,500.00

I've had a few clients who have done this, and it's usually a good idea to transfer the property initially into the joint names of the donor and the beneficiary(ies) as tenants-in-common.

What I've usually advised my clients to do is to then transfer a percentage share in the property that's roughly equivalent to the unused part of their annual CGT exemptions. Eventually, after several years, there would be a final transfer of the legal title into the names of your children, so that you then no longer have any interest in the property.

The transfer of the increased interest is achieved by a declaration of trust, but these were simple enough, and once the scheme is set up they're easy to do - I never charged more than £100 for these, and I'm sure other solicitors would charge similar amounts.

This scheme has always worked well, but will be more problematic in future due to the forthcoming reductions in the annual CGT exemption.