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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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My friends father wishes to give her his London

Resolved Question:

My friends father wishes to give her his London flat(£200k).It is normal place of residence.When in her name she wants to sell it and buy a place nearer her home just to keep. He doesn't want to sell it himself and give her the money as the gift he wants to transfer it. I assume from that (he would not pay any tax on the sale)that she would be liable for CGTax at18% on the the value less 11100. Can you please advise on the tax payable and or the best way to proceed. MIke Gibson
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question..

Giving the property that is his main residence as a gift to his daughter would not result in CGT on the father as he would be transferring the property that has been his main residence during the period of ownership.

The father should be mindful of the fact that the gift would be regarded as a potentially exempt transfer for inheritance tax purposes. If he were to survive for 7 full years from the date of the gift then this gift would be out of scope of IHT.. more information on this can be found here

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/

The daughter would receive the property free of tax as there is no tax on gifts.

When she sells the flat, unless it is her main residence for CGT puposes, any gain made on sale (difference between net sale proceeds and valuation at the time of gift) would be chargeable to CGT after taking into account the gains allowance of £11,100. She would not pay CGT on the value of the property but on the gain made. CGT rate of 18%, 28% or a combination of both depending on her total taxable income including the gain in the year of sale.

She would have to report the gain on supplementary page SA108 when completing and filing her tax return.

I hope this is helpful and answers your question.

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Expert:  taxadvisor.uk replied 1 year ago.

I thank you for accepting my answer.

Best wishes