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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4808
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I have a (in my name and no mortgage) property with a

Customer Question

Hi , I have a (in my name and no mortgage) property with a large capital gain and I want to sell into a Ltd co. I wish to exploit my wife's CGT allowance. Therefore my plan is to transfer to my wife's name (100%) then sell into our Ltd co. Is this feasible ?Are there any restrictions or time limits. I.e can this be done the day of transfer to Ltd co etc. Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Please advise the following points. Was this your sole or main domestic residence? Was it rented out? If it was were these rentals Furnished Holiday Lettings? Once I know this I will be able to advise you further.
Customer: replied 2 years ago.
This is a pure rental property on AST . It has never been a domestic residence for us.
Expert:  bigduckontax replied 2 years ago.
Here is the advice from The Telegraph regarding Rollover Relief: 'The relief applies to trades but HMRC does not regard a rental business as a trade unless it qualifies under the Furnished Holiday Lettings rules.' Rollover Relief would have enabled you to defer any Capital Gains Tax (CGT) due on the sale until you sold the shares in the company at some indefinite, future date. This transfer will constitute a disposal as far as you are concerned and you will be liable to CGT on any gain made. The gain is the difference between the current market value as at the transfer date and the acquisition price. The latter is the cost of the property plus any purchase costs including Stamp Duty Land Tax (SDLT) plus any improvements eg installation of double glazing, central heating, extensions etc, but not routine maintenance which would be allowable against rentals for Income Tax (IT) purposes. This gain will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. You do have an Annual Exempt Amount (AEA) of 11.1K to offset this gain. You are not entitled to Lettings Relief (LR) as you never occupied the property, a pity as it is otherwise available up to 40K. Transfer to the wife is feasible, but only if the sale is to be long deferred. Although inter spousal transfers are outside the scope of UK taxation her gain would be proportional on her ownership which has only just started and will thus be minimal. The AEA would not be absorbed and any conveyancing costs probably outweigh the benefits. I am so sorry to have to rain on your parade.