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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife owns a property in her name we are about to sell.

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My wife owns a property in her name we are about to sell. Can we draw up a 'declaration of trust' to split the property 4 ways (wife, husband and two daughters) to split our capital gains tax liability?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. How old are your daughters?
Customer: replied 1 year ago.
23 and 21 and both currently full time students
Expert:  TonyTax replied 1 year ago.
Thanks. Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.
You can set up a declaration of trust to show the four owners of the property and the percentage share each individual owns. As the maximum number of names that can be on the title deeds is four, you may as well try to get all the names on the deeds if you can. However, whilst the gift/disposal to you by your wife will be treated as having been done on a "no gain, no loss" basis, the gifts to your daughters will be treated as disposals made at the open market value with potential CGT implications for your wife. In addition, the value of the gifts will not leave your wife's estate for Inheritance Tax purposes for seven years after they are made. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks. The probate value of the house was £210K and we have just accepted an offer for £300K. Taking off expenses the gain is circa 80K. If my wife is gifting a quarter share to me and my daughters, are you saying that I will not be liable for capital gains for my share (or would I have to pay CGT on my £20K share of the gain)? Also is it my wife or daughters that would be liable for the capital gains tax on our daughters shares? We are obviously looking to minimise the CGT as much as possible.
Expert:  TonyTax replied 1 year ago.
You will acquire your share of the property with a CGT cost of £52,500 (£210,000 / 4) but your wife won't have to pay CGT on that part of her gain due to the spousal exemption on intra-spouse transfers. The gift will also be IHT exempt. Your share will be sold for £75,000 before expenses of sale so you will make a gain of £22,500 before expenses. Your wife would have a gain of £45,000 if she gifts a quarter of the property to each of your daughters (£90,000 / 4 x 2). Your daughters will each have a CGT cost of £75,000 so there should be no taxable gain on them when the property is sold. Your wife will make a gain of £22,500 before expenses of sale on the disposal of her remaining quarter share.
Customer: replied 1 year ago.
OK so I would have to pay CGT on £22,500 and my wife would have to pay CGT on £67,500?
Expert:  TonyTax replied 1 year ago.
That's correct but you each have a CGT exemption for the first £11,100 of gains you make in 2015/16.
Expert:  TonyTax replied 1 year ago.
That's correct but you each have a CGT exemption for the first £11,100 of gains you make in 2015/16.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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