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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4190
Experience:  FCCA FCMA CGMA ACIS
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If I transfer property with a mortgage into a tax efficient

Customer Question

If I transfer property with a mortgage into a tax efficient trust structure do I have to
1. pay CGT or SDLT or any other tax.
2. Get the approval of the mortgage lender or get a special Trust Mortgage ?
3. Should I transfer them into a LLP or a LLC for tax efficiency
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. You need the approval of the mortgage lender; without this your plans are a dead duck. This constitutes a disposal for CGT purposes so you will be liable for the tax on any gain made. You will be liable for Cypriot Stamp Duty on the transaction. I am of the opinion that there would be no advantages in using a Limited Partnership or Company for this transaction, just a lot of unnecessary palaver. I do hope that I have helped shed some light on your position. You should, however, consult a trusted, local professional in these matters.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Customer: replied 2 years ago.

In a family partnership could I start to transfer profits to my children ? I am only on holiday in Cyprus back tonight.

Or should I just sell them pay the CGT and pass on the money from the sales to my children ? If not what else can I do in a tax efficient way ??

Expert:  bigduckontax replied 2 years ago.
Firstly I have misunderstood; forget about Cypriot stamp duty. SDLT is payable on the consideration passed and is the liability of the purchaser. If you give the proceeds of the sale to your children then you create a Potentially Exempt Transfer (PET) in your Inheritance Tax (IHT) computation. PETs run off at a taper over seven years and in the event of the donor's decease are added back to his estate for IHT and are the first to suffer tax. If the estate is insufficient to meet the tax on the PET then the liability cascades down to the beneficiary for immediate payment. IHT kicks in at 325K (plus inter spousal or charitable bequests) and is at 40% flat rate (36% if 10% of bequests are charitable). Otherwise the UK has no gifts tax regime.