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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife and i are disposing or a house (not main residence)

Resolved Question:

My wife and i are disposing or a house (not main residence) to
our children by giving them a share each every year, to make
best use of the annual CGT allowances. The question is about date
of disposal to be reported for CGT purposes. Must we use the date
the change in ownership is recorded at the land registry, or can we use the
date at which the disposal is agreed?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

Normally, in a property disposal, the date that contracts are exchanged is the tax point for Capital Gains Tax purposes.

If I were you, I'd have an exchange of letters at the very least so as to document the gifts. In a letter to each of your children, you would tell them of the gift of a share of the property and that the gift will be treated as having taken place on the date the gift recipient signs a copy of the letter and returns it to you. You could all be in the same room when this is done. The gift date will the tax point for CGT purposes.

That's the way I've seen it done in the past but you might run the idea by a property solicitor for peace of mind. Another way to ensure that you get the names on the title deeds in the right tax year is to get all the Land Registry paperwork to them at least two months before the end of the tax year.

There is a risk that HMRC may attack the piecemeal gifting of the property on the basis that the point of the partial gifting is simply to avoid tax. If that happens, then you should have an accountant or tax expert take up the fight with the tax office.

I hope this helps but me know if you have any further questions.











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