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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
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: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year 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 1 year 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 1 year 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 1 year 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 1 year 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 1 year 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 1 year 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 1 year ago.
OK I'll get back to you.
Expert:  TonyTax replied 1 year ago.
OK.
Customer: replied 1 year 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 1 year 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 1 year 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 1 year 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 1 year ago.
Ok
Expert:  TonyTax replied 1 year ago.
Thanks.
Customer: replied 1 year ago.
Thanks v much
Can you just clarify Q2 when you say 'unless I wrote it off?'
Expert:  TonyTax replied 1 year 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 1 year ago.
Thanks.
Expert:  TonyTax replied 1 year ago.
Thanks.
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