As long as the home you give away is your main home, Capital Gains Tax won’t be payable.
However, if you give away a second home, Capital Gains Tax may be payable if the property has increased in value between when you first owned it and when you gave it away.
If you sell your second home and give the money to your children, the gift won’t be included in your estate for Inheritance Tax purposes, provided you live for 7 years after you make the gift.
Each year individuals have a capital gains tax allowance, called an exemption
|Individuals, personal representatives and trustees for disabled people||£10,600||£10,900||£11,000|
It is possible to to gift property in stages.
Your solicitor will draw up the required documents to conveyance a percentage of the property and register the transactions with the Land Registry.
In order to calculate the capital gain you will need to know the acquisition cost and any reliefs such as PPR.
Giving away your property in stages could save you from having to pay capital gains tax.
The person you give the property to may not have to pay SDLT…
If the property is received as a gift there’s no SDLT to pay, so long as there’s no outstanding mortgage on it.
A company meets the qualifying conditions for a micro-entity if it meets at least two out of three of the following thresholds:
- Turnover: Not more than £632,000
- Balance sheet total: Not more than £316,000
- Average number of employees: Not more than 10
There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.
Most property businesses will have less than 10 employees and less than £632,000 turnover.
If you are a property investor filing Abbreviated or Full Accounts you have to report property values at their fair value, which means you tell everyone what you think the property is worth. You may not want to do that, especially if you are planning to sell as it tells the potential buyer what you think its worth and that might be an issue in negotiations.
Under the Micro Entity regime you aren’t allowed to use fair value and have to use Historical Cost. Which most Property Investors will prefer.
No notes are required with Micro Entity Accounts and any advances or financial commitments are shown at the foot of the Balance Sheet, often this is simply the value of the Mortgage outstanding.