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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I'd like to gift a property to a nephew, but keep my name on

Resolved Question:

I'd like to gift a property to a nephew, but keep my name on the deeds so that he does not get rid of it without consulting me.
Do I have to pay CGT on the aspiration since I acquired it, now? Or do we pay it when it is finally disposed of?
The thinking being: as I am not getting proceeds now why would I have to pay CGT.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. If you gift the property to your nephew, it will be both a gift for Inheritance Tax purposes and a disposal for Capital Gains Tax purposes. Should you not live for seven years after making the gift, its value will form part of your estate for IHT purposes, though any potential IHT charge will start to taper away after three years as you can read here. You may also have to pay CGT if you make a gain, albeit a paper one by giving the property away. The taxable gain may be reduced if the property has ever been your main home. Take a look here for information on the main residence and CGT. I hope this helps but le tme know if you have any further questions.
Customer: replied 1 year ago.

So just to be clear, and setting the IHT, even though my bank account never sees any cash from property the gifting I still have to pay cash to the revenue next year? SA

Expert:  TonyTax replied 1 year ago.
That's correct unless the property is part of a business you are gifting your nephew.
Customer: replied 1 year ago.

Can you elaborate on the business thing; of course it is one of my let properties. SA

Expert:  TonyTax replied 1 year ago.
I'm afraid that letting property is not classed as a "proper" business by HMRC unless it is a furnished holiday let. If it is, you could claim business asset holdover relief which you can read about here. That would effectivelty transfer the gain to your nephew but it would not be taxable until a subsequent disposal. Alternatively, you could claim entreprenuers' relief if the transfer was of a business asset and only pay CGT at 10%. Read about ER here.
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