Can I gift half of a let house to my wife to reduce £60k CGT

[Peter123]

Hello,

I bought a house four years ago at auction for £15k, tidied it up and let it out. The house is now worth £75k and I am trying to understand the options to reduce the tax bill.

The Mrs's does not work, although she claims that she deserves a mega salary being married to me, which I obviously dispute. Anyway, moving on the CGT gain is about £60k, taper relief will not amount to much, let say that the taxable gain is circ of £60k.

I have other income of £10k

What are the choices?

1) If sold personally in my name it would appear that I would pay tax on £60k less the CGT allow (£9k) = £51k . That looks like 40% tax on about £30k = £12k (ouch)

2) Can I gift half to the Mrs's and use her £9k CGT Annual Exemption and her lower tax bands, therefore £30k less £9k = £21k @ 22@ = £4.5k, saving £7.5k.

3) How do I gift it the Mrs's is this via Land Registry or via some sort of Deed Trust or via some Inland Revenue form

4) Are there any other legal options?

Thanks, Peter123

[Tax Accountant]

Hello,

I bought a house four years ago at auction for £15k, tidied it up and let it out. The house is now worth £75k and I am trying to understand the options to reduce the tax bill.

The Mrs's does not work, although she claims that she deserves a mega salary being married to me, which I obviously dispute. Anyway, moving on the CGT gain is about £60k, taper relief will not amount to much, let say that the taxable gain is circ of £60k.

I have other income of £10k

What are the choices?

1) If sold personally in my name it would appear that I would pay tax on £60k less the CGT allow (£9k) = £51k . That looks like 40% tax on about £30k = £12k (ouch)

2) Can I gift half to the Mrs's and use her £9k CGT Annual Exemption and her lower tax bands, therefore £30k less £9k = £21k @ 22@ = £4.5k, saving £7.5k.

3) How do I gift it the Mrs's is this via Land Registry or via some sort of Deed Trust or via some Inland Revenue form

4) Are there any other legal options?

Thanks, Peter123

You could transfer this in your joint names before you start the selling process. In this case, the gain will be divided between the two of you and each one will be taxed only on his/her share of the taxable gains after taper relief and CGT annual exemption.

It is best to contact the Land Registry and change the actual deeds.

But it is also possible to effect a Trust Deed through your solicitor but he may charge you a fee for doing this.

Ramnik

[Peter123]

Ramnik,

Thanks for the reply.

How do I avoid the transfer with Land Registry avoiding an immediate CGT arising.

Thanks again.

Regards, Peter

[Tax Accountant]

Ramnik,

Thanks for the reply.

How do I avoid the transfer with Land Registry avoiding an immediate CGT arising.

Thanks again.

Regards, Peter

There is no CGT on any transfers between spouses. Your wife effectively takes over at your base cost. The end result is as if you and your wife owned the property jointly from the beginning.

Ramnik

[Peter123]

Ramnik,

Thanks much appreciated.

Peter

[Tax Accountant]

Ramnik,

Thanks much appreciated.

Peter

My pleasure. Pay it forward.
Ramnik