My daughter lives in the UK and is a UK resident, born and brought up in the UK by British parents. I have recently moved to live in France and want to transfer my house into her name. What are the tax implications for her if I do this? There will be no rent payable to her as I shall retain the right to live in the home rent free. I shall of course pay all French local taxes etc. She is studying law at the moment and is renting a flat in London. In a couple of years we hope she will be able to have her own place with a mortgage. I would appreciate your advice regarding the UK tax rules. Clare XXXXX
So long as you are UK domiciled, the gift of the French house will still be subject to the reservation of benefit rules for UK Inheritance Tax purposes if you continue to live in it. As far as your daughter is concerned, the fact that she has a second home will not impact on her UK income tax situation so long as he receives no rental income for it. If she sold it for more than its value when it is gifted to her, she may have to pay UK Capital Gains Tax. She could make an election for the French home to be treated as her main residence within two years of acquiring it for CGT purposes even though she owns no property in the UK but she would need to actually spend some time living in it for such an election to work. If it does, then any profit she makes from a sale would in theory be exempt from CGT so long as the property is classed as her main home. The tax office may challenge the main residence claim later on if your daughter sells the property and claims some tax exemption because you and your husband will have retained the right to live in it after gifting it to her.
Thank you. However, I am a French resident now as my home is in France and I live here for more than 52 weeks a year. What, then, is the situation for my daughter in this case? Clare XXXXX
How complicated can things get!!! I intend to return to the UK before too long - I shall look at the references you have given me, so many thanks. It still doesn't help me with my original query about whether my daughter will have to include the French house in her tax return and what implications it will have on her. I know that the French system involves much less tax if I do put the house in France in her name.but I just wanted to be clear about the UK side of things re tax. I shall look at the references you have given. Thank you Clare XXXXX