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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Are there any tax implications of transfer of equity from brother

Customer Question

Are there any tax implications of transfer of equity from brother to sister
Submitted: 2 years ago.
Category: Tax
Expert: replied 2 years ago.
Thank you for your question...Please expand on your statement ...what do you mean by transfer of equity ... is there any consideration or is it a gift?Many thanks
Customer: replied 2 years ago.
The flat is owned without mortgage and as his sister lives at the address the young man wishes to have her name in the title deeds.
I don't know if this is classed as a gift. I do not understand the term consideration
Expert: replied 2 years ago.
Thank you for your reply.Your question is “Are there any tax implications oftransfer of equity from brother to sister” There are tax implications of transfer of equity between siblings and these are covered here For brotherCapital gains taxAdding a name of sister to the title deed is deemed as a transfer/part disposal to have taken place.Unless there is a full payment for that share, the transaction is deemed to have taken place at market value. You need to replace the price paid with the market value of the asset when you work out your gain or loss.In the event, no money changed hands then the whole value is regarded as a gift. Unless brother had lived in the flat as his main residence at some point during the period of ownership, the whole gain on part disposal would be chargeable to CGT after taking into account gains annual allowance (this tax year £11,100). CGT rate on gain will be 18%, 28% or a combination of both depending on total taxable income including the gain in the tax year of sale/transfer. More information on “who is considered a connected persons in Capital gains” can be found here Inheritance taxThe gift to sister would be regarded as a potentially exempt transfer for IHT purposes and the seven years rule would apply to the gift. If brother survives for 7 full years after making the gift, then the gift is out of scope of IHT and no IHT is due.More information on PETs can be found here For sisterA recipient of a gift receives it free of direct taxation in the UK. There is no tax on gifts. It does not have to be reported on a tax return. I hope this is helpful and answers your question. If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.
Customer: replied 2 years ago.
Thanks. This is what I thought so it is good to have it confirmed. In fact the property is their residence so CGT wouldn't be an issue unless they move on?
Expert: replied 2 years ago.
Thank you for your reply.
I hope my response is helpful and answers your question.
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