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TaxRobin
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Experience:  International tax
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My siblings and I own jointly a commercial property that has

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My siblings and I own jointly a commercial property that has been held by my family for more than 35 years. The property is held by my siblings in trust for all of us. My share of rent is about £2000 per annum. The capital value of the property has increased by about £150,000 in that period.
As my wife does not work, I would like to transfer the rental income to her as this will reduce the tax payable, how may this be done and are there any future problems when the property is finally sold?
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello,
If you own a property (or portion there of) that is let at a commercial rent to an unconnected third party. You could transfer the property by outright gift to your spouse, who then receives the rents. You would have no further interest in or rights over the property. The rents that your spouse receives are not subject to the settlements legislation.
You would need to gift the interest you hold to your spouse.
Your spouse would have CGT on the property for the portion of the property that is gifted to them.
You stated the property is held in trust. You would need to check on the trust document to see if you are allowed to transfer the property interest.
The type of trust that is holding the property is relevant. Speak with your siblings about the trust type then you you can speak with your solicitor about transfers.
Customer: replied 2 years ago.

The only "Trust" document is the gifting of the property by my mother to by sister and brother, with the statement that it is for the benefit of all siblings. There are no restrictions to transfer. How do I transfer the property interest to my wife? Is there a specific legal format?

Also, as the property (it was originally a food outlet which we operated and continues to be such but operated by another party) has ben in the family as a business for 35 years, are there any reliefs applicable when computing the capital gain for tax purposes and if so, will they apply if I transfer the interest to my wife?

Expert:  TaxRobin replied 2 years ago.
You would want your solicitor to draw up the transfer to your spouse.
Gifting your portion of ownership to your spouse would accomplish this.
Property conveyancing is usually done by a solicitor.
Your wife will (after the transfer) have any reliefs based on the use of the property.
Customer: replied 2 years ago.

What are the reliefs for a property used as a fast food outlet? Would the reliefs be greater if I retained the interest in the property?

What is the tax that will be payable on the disposal proceed of about £35,000 and original cost of about £5,000 (35 years ago)?

Expert:  TaxRobin replied 2 years ago.
No the reliefs would not be greater. The reliefs would be Entrepreneurs’ Relief which reduces the amount of the Capital Gains Tax (CGT)
on a disposal of qualifying business assets .
Customer: replied 2 years ago.

Each sibling holds an effective 20% share in the business. I am unsure how to classify the business as there is no formal partnership document, though It is treated as such as all revenues and costs are shared equally. Each will have held that 20% share for more than a year.

Will we each qualify for entrepreneurs' relief?

Expert:  TaxRobin replied 2 years ago.
Your solicitor would be able to best handle the transfer of your interest in the business to your spouse.
If your interest in this is part ownership of property then they will need to address the transfer and properly register the change.
If you own a business that is a fast food establishment then that is different and would involve your giving your spouse your share of teh business.
Each person would be allowed to use the relief base don their portion of ownership. If your ownership transfers to your spouse then your spouse is allowed the relief should they sell.
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Category: Tax
Satisfied Customers: 14438
Experience: International tax
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Customer: replied 2 years ago.

Sorry for not being clear.

The property is in my mother's name but gifted by deed to two of my siblings on the understanding that it is for the benefit of all siblings (five in total). As I am not named on any property register what document of transfer required? Is it just a deed of gift?

Expert:  TaxRobin replied 2 years ago.
A Deed of Gift is a transaction where legal ownership of a property changes hands but at least one of the original owners remains on the title. If this is what your siblings did for the remaining ones not on the deed, then you could use that for transfer to your spouse. You need to ask your solicitor though before you use such an instrument.
If you are not named on the deed it is doubtful that your siblings used that avenue.
You would first need the exact method of transfer that was used to make you liable for the income you are receiving.
We have really stepped outside the realm of tax on this issue and moved from your original question.
Expert:  TaxRobin replied 2 years ago.
CustomerLast Viewed on 26/08/2014 at 13:28
I thank you in advance for a positive rating, this compensates me for my time and lets Just Answer know you were assisted.
Customer: replied 2 years ago.

Thanks for your help

Expert:  TaxRobin replied 2 years ago.
You are most welcome.

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