G
I suspect I'm going to have to get professional advice but I thought
I'd ask here first.
I have a property that I own 99%, with my partner owning 1%. What I'm
considering is crystallizing the gains by giving or selling another
98% to my partner. (We are not married)
The intention would be for me to take back ownership - for two main
reasons, 1. she doesn't want the worry of owning a property that she
doesn't live in and 2. if property prices do fall, the a CGT loss is
more likely to be of use to offset other gains to me than to her.
If I gift the property to her and then I die, the gift will count
towards IHT. But as she gets the rest of my estate anyway that
shouldn't matter. The complication occurs if she then gifts it back to
me. If I die then will she still have to pay IHT on the gift that she
no longer owns? Note that my share of the property goes to charity if
I die if that makes any difference.
I don't think her estate would be anywhere near paying IHT so that is
simple.
But I could also sell the property to her. I could achieve that by
lending her the money to buy it from me (if necessary I could transfer
the actual funds into her bank account, this would not need to be a
theoretical loan where the funds have never existed). Presumably that
way there would be no IHT liability if either of us die.
Am I allowed to lend her approximately 100K at 0% with no fixed
repayment schedule? Would it be OK to say that the loan can be repaid
at any time by either paying the money or returning the share of the
property even if property prices have fallen?
Are there any tax implications for her if I lend her 100K?
Finally, if we do decide to go with this scheme, is a simple letter
saying "I gift you a further 98% of <property> on identical terms to
the deed of trust dated <date>" or "I hereby sell you 98% of
<property> for <amount>." ok?
Tim.
I'd ask here first.
I have a property that I own 99%, with my partner owning 1%. What I'm
considering is crystallizing the gains by giving or selling another
98% to my partner. (We are not married)
The intention would be for me to take back ownership - for two main
reasons, 1. she doesn't want the worry of owning a property that she
doesn't live in and 2. if property prices do fall, the a CGT loss is
more likely to be of use to offset other gains to me than to her.
If I gift the property to her and then I die, the gift will count
towards IHT. But as she gets the rest of my estate anyway that
shouldn't matter. The complication occurs if she then gifts it back to
me. If I die then will she still have to pay IHT on the gift that she
no longer owns? Note that my share of the property goes to charity if
I die if that makes any difference.
I don't think her estate would be anywhere near paying IHT so that is
simple.
But I could also sell the property to her. I could achieve that by
lending her the money to buy it from me (if necessary I could transfer
the actual funds into her bank account, this would not need to be a
theoretical loan where the funds have never existed). Presumably that
way there would be no IHT liability if either of us die.
Am I allowed to lend her approximately 100K at 0% with no fixed
repayment schedule? Would it be OK to say that the loan can be repaid
at any time by either paying the money or returning the share of the
property even if property prices have fallen?
Are there any tax implications for her if I lend her 100K?
Finally, if we do decide to go with this scheme, is a simple letter
saying "I gift you a further 98% of <property> on identical terms to
the deed of trust dated <date>" or "I hereby sell you 98% of
<property> for <amount>." ok?
Tim.