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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I give my daughter money to buy a property, is it taxable? If I lend her the money, ca

Resolved Question:

If I give my daughter money to buy a property, is it taxable?
If I lend her the money, can I stipulate repayment eg £100 per month @ 0.1% over 60 years?
Submitted: 12 months ago.
Category: Tax
Expert:  TonyTax replied 12 months ago.
Hi. Gifts aren't taxable on the recipient. They are, however, potentially exempt transfers for Inheritance Tax purposes so should you die within seven years of making a gift it will remain in your estate. Take a look here for information on IHT. You can lend your daughter the money but if you charge her interest, that will be taxable income for you. I hope this helps but let me know if you have any further questions.
Customer: replied 12 months ago.
Am I correct that if she let's one room under rent a room no tax is payable? If she were to let 2 rooms & live in property, would income tax be payable on 2nd rental & also 40% cgt be payable on price increase at sale? If she were to let 2 rooms and not live in property, income tax would be payable on both rooms and cgt on sale price increase?
Customer: replied 12 months ago.
So if I lend her say £300 000, can I lend it tax free at repayment rate of say £100 per month for many years, which will probably be after I expire?! Also, is that then tax free?
Expert:  TonyTax replied 12 months ago.
Rent a room relief is available for the first £4,250 of rental income for a room let under the rent a room rules which require the landlord to be living in the same property. It doesn't matter how many rooms are let, the relief is still £4,250. The limit will increase to £7,500 from 6 April 2016.
CGT is charged at 18% and 28% depending on the level of the taxpayer's income in the tax year of disposal. Take a look here for information on CGT and the main home:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief
Expert:  TonyTax replied 12 months ago.
If you die with a loan outstanding, it will be an asset of your estate and your executors could demand repayment unless you make a stipulation in your will.
Customer: replied 12 months ago.
I have just signed up to 7 day free trial and then £35 per month. So when dies free trial start?!
Expert:  TonyTax replied 12 months ago.
I don't deal with those type of questions. You will have to contact just answer for information on free trials and subscriptions.
Customer: replied 12 months ago.
OK I'll get back to you.
Expert:  TonyTax replied 12 months ago.
OK.
Customer: replied 12 months ago.
To check ive got this right:So if she were not to live in property, she would pay 18%-28% cgt on sale price minus purchase price?
And: if I loan ££ it will always remain in my estate whereas if I gift it, the iht payable will reduce over 7 years to not be in my estate? Can I loan it with a clause in the will that when I die, if the loan has not been repaid, then it will be cancelled out entirely, or are there tax implications for that?
Expert:  TonyTax replied 12 months ago.
First question: Correct Second question: Correct, unless you wrote it off in which case the 7 year clock would start ticking. Third question: Yes, but it will effectively be a legacy to your daughter and will use some or all of your nil-rate IHT band.
Customer: replied 12 months ago.
Q2 when you say unless I wrote it off?Also regarding FHL, if a property is let/available as a FHL, for 3 months of a year starting August, but property is sold end Jan/ early Feb the following year
Q1 does property quailfy for FHL allowances?
Q2 if property was main home for past 2 and a half years, apart from FHL period of 3 months, is there any CGT payable on sale - purchase price ?
Expert:  TonyTax replied 12 months ago.
You are asking questions on multiple topics. Once you move away from the original topic I have to ask you to post any other questions as new standalone questions I'm afraid.
Customer: replied 12 months ago.
Ok
Expert:  TonyTax replied 12 months ago.
Thanks.
Customer: replied 12 months ago.
Thanks v much
Can you just clarify Q2 when you say 'unless I wrote it off?'
Expert:  TonyTax replied 12 months ago.
If you said to your daughter that you didn't need her to repay the loan, at that point what was left of it would become a gift and the seven years would start.
Customer: replied 12 months ago.
Thanks.
Expert:  TonyTax replied 12 months ago.
Thanks.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15748
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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