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We own a 2nd property in my wife's name, no mortgage. We plan

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We own a 2nd property in my wife's name, no mortgage. We plan to sell it to my daughter & her husband for approx 10% less than the market value. They will buy with a mortgage. Are there any capital gains tax and stamp duty implications for us. If we change the title to both our names does this increase the capital gains tax allowance? Would we have to make a declaration to HMRC? Thanks.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question - my name is ***** ***** I am one of the UK tax experts here on Just Answer.
Your wife will have a capital gain (as things stand) and this will be formed by the market value at sale (not the actual sale price) less the value when the property was purchased/acquired. (from which the costs to buy and sell - such as legal fees, any stamp duty suffered and any capital improvements can be deducted)
You could transfer the property into joint names (which would give no rise to capital gains OR stamp duty - as one transfers between spouses do not arise and there is no mortgage on the property so no stamp duty) However if the transfer to joint names AND the sale to your daughter and husband occur within the same tax year, HMRC will argue that this was undertaken to avoid capital gains, rather then to create a tax efficiency. So ideally you would make the transfer now and sell after 06/04/2016 to create a tax year separation of action.
Then you will be safe in benefiting from 2 x annual exemption for capital gains - so £11,100 x 2
Your daughter and son in law may then have stamp duty to pay - if it falls within the threshold due -
These amounts are
You’ll pay:
nothing on the first £125,000 of the property price
2% on the next £125,000
5% on the next £675,000
10% on the next £575,000
12% on the rest (above £1.5 million)
Do let me know if you require any follow up on the responses I have provided.
Thanks
Sam
Customer: replied 2 years ago.
Thanks for your very helpful answer. How is the market value arrived at? Would a conservatory and a new replacement boundary fence be considered capital improvements?
Neil
Expert:  Sam replied 2 years ago.
Hi
Thanks for your response
By virtue of a couple of valuations from local estate agents -
Link here from the capital gains manual as this transaction is not at arms length
http://www.hmrc.gov.uk/manuals/cgmanual/CG14540.htm
Then the capital improvements - the conservatory and boundary fence would be allowable as both of these would enhance the cost of the property.
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13808
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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