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bigduckontax
bigduckontax, Accountant
Category: Tax
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Dear *****, As I have already pointed out, I am a German citizen

Customer Question

Dear *****,
As I have already pointed out, I am a German citizen resident in Morocco and my duaghter is Swiss, resident in Greece; and I own a property worth about 600-800,000 pounds in London.
My questions are:
1. Can I avoid exposure to inheritance tax by "SELLING" my apartment to my daughter (instead of gifting it) and paying the appropriate transfer stamp tax on the sales ?
2. How LOW can I legally set the selling price to her?
3. Does there need to be any evidence of cash/funds actually passing from her Swiss bank account to mine? Or can I simply declare in a sales contract that I have given her a loan for the purchase (which I would later expunge)?
I realize that this transaction may incurr gift tax liability in Greece, but are there any tax implications in the UK (other than payment of transfer stamp tax.)?
Thanks for your advice.
Best regards,
Christian von Stieglitz
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Your exposure to Inheritance Tax is by means of a Potentially Exempt Transfer (PET). PETs run off at a taper over seven years so if you survive that long then no IHT applies to the gift. PETs are added back to your estate on demise and are the first to taxed. If your estate is insufficient to meet this then the liability cascades down to the beneficiary for immediate payment. If you sold the apartment to her you would avoid the PET pitfall. However, you would be liable for Capital Gains Tax (CGT) on the gain on the transfer value at current market price and the value as at 6 April 2015. You do, as an EU citizen have 11.1K of Annual Exempt Amount to offset this gain. You will have to pay stamp duty at the appropriate level and your conveyancing solicitor, who is responsible for paying that duty, will advise you of that impost. You could transfer the property by means of a Land Registry transfer; a much more economical method. The UK does not have a gift tax regime. Thank your lucky stars you don't live in France where gift tax kicks in at 5K Euros.
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Expert:  bigduckontax replied 2 years ago.
Thank you for tour support.