BTL landlord retiring- use trust to defer CGT?

[jonblair123]

I am sure the information I ask here, can be found in several of the posts here, but since it is in several different posts and replies,
it is confusing. I think it will be better in one post, so please can someone supply it again here.

I am retiring from landlording, and wish to sell up, or give away my properties or the sale proceeds, to my grown up children (adults now!) who could do with some help. I of course hope to survive atleast 7 years, but if I dont, they will have to pay IHT.

The properties are unencumbered, and I could easily fill in the Land Registry forms, whereby they will become the new owners. The question here is, is Stamp Duty payable? Then, to calculate the disposal value for my CGT purposes, what do I use?

I understand that there is a way to defer the CGT liabilty by putting the properties in trust whereby the CGT is paid eventally when the trust
disposes of them. The question here is how much does it cost to have a trust formed by say an accountant or solicitor? Once a trust is formed, does it require a professional such as a solicitor or accountant to run it ?.

Can anyone recommend a professional who is good at drawing up trusts?

[Tax Accountant]

I am sure the information I ask here, can be found in several of the posts here, but since it is in several different posts and replies,
it is confusing. I think it will be better in one post, so please can someone supply it again here.

I am retiring from landlording, and wish to sell up, or give away my properties or the sale proceeds, to my grown up children (adults now!) who could do with some help. I of course hope to survive atleast 7 years, but if I dont, they will have to pay IHT.

The properties are unencumbered, and I could easily fill in the Land Registry forms, whereby they will become the new owners. The question here is, is Stamp Duty payable? Then, to calculate the disposal value for my CGT purposes, what do I use?

I am not a solicitor but my guess is that there is no stamp duty on a gift.

Disposal value will be the open market value at which you would have been able to sell the properties to third parties. Check selling / asking prices in the recent past of similar properties in the same area by looking at websites, agents particulars, newspaper cuttings etc. After you have already transferred the properties, but before you have completed the tax returns, you can write to the tax office to agree a ''post-transaction'' valuation. Otherwise, use your best estimates to complete your CGT pages. The Inspector will refer these to Inland Revenue District Valuer who will either agree to these or contact you to negotiate a value.

I understand that there is a way to defer the CGT liabilty by putting the properties in trust whereby the CGT is paid eventally when the trust
disposes of them. The question here is how much does it cost to have a trust formed by say an accountant or solicitor? Once a trust is formed, does it require a professional such as a solicitor or accountant to run it ?.

Can anyone recommend a professional who is good at drawing up trusts?

See replies in red above.

Ramnik

[jonblair123]

Thanks Ramnik.

[Tax Accountant]

Thanks Ramnik.

You are welcome.

Ramnik

[jonblair123]

See replies in red above.

Can anyone recommend a professional who is good at drawing up trusts?

Ramnik

So does anyone know/recommend a professional who can draw up a trust?

[welshgold]

So does anyone know/recommend a professional who can draw up a trust?

having had a meeting a year ago with a solicitor on this , i was advised strongly to not go down the route of a trust as it would cause lots more problems than it would solve, since the last budget with tax laws changing on trusts , i realise he was certainly correct.

i will also comfirm as i have transferred some property, that stamp duty is not payable (but how long before they change this loophole )

as to values of property, get a couple of local estate agents to value, ask for quick sale realistic valuation, not there hopeful valuation of what it might sell for.

[jonblair123]

having had a meeting a year ago with a solicitor on this , i was advised strongly to not go down the route of a trust as it would cause lots more problems than it would solve, since the last budget with tax laws changing on trusts , i realise he was certainly correct.

i will also comfirm as i have transferred some property, that stamp duty is not payable (but how long before they change this loophole )

as to values of property, get a couple of local estate agents to value, ask for quick sale realistic valuation, not there hopeful valuation of what it might sell for.

Thanks for your input. I will take into consideration the advice regarding trusts, and the assault on them by the inland revenue. However, so as not to throw the baby away with bathwater as it were, the trust that I am looking into, does not avoid any tax or CGT, and as such, may not be subject to anti-avoidance measures. It merely defers the payment until the property is actually sold, and is worth considering. It may not be under inland revenue scrutiny like some of the other trusts are. And even the valuation does not matter under these circumstances, because be it high or low, the eventual sale will determine the capital gain. Am I correct on this point Ramnik?

[Tax Accountant]

Thanks for your input. I will take into consideration the advice regarding trusts, and the assault on them by the inland revenue. However, so as not to throw the baby away with bathwater as it were, the trust that I am looking into, does not avoid any tax or CGT, and as such, may not be subject to anti-avoidance measures. It merely defers the payment until the property is actually sold, and is worth considering. It may not be under inland revenue scrutiny like some of the other trusts are. And even the valuation does not matter under these circumstances, because be it high or low, the eventual sale will determine the capital gain. Am I correct on this point Ramnik?

If the CGT liability is deferred, it effectively means that the receipient takes over at your original cost. Therefore, the intermediate valuation does not matter.

But you should check if there is any IHT liability at regular intervals during the intermediate years depending on the value of the assets held in the trust.

Ramnik

[jonblair123]

If the CGT liability is deferred, it effectively means that the receipient takes over at your original cost. Therefore, the intermediate valuation does not matter.


Ramnik

I am under the impression that CGT can only deferred by forming a trust. Am I correct?

Is it possible to gift an asset to an individual and defer CGT payment? (CGT calculated from the original purchase by the giver). If this were possible, it would be my preferred method of disposal.