CGT question

[ASB]

Ok, I have a house I am planning to sell. This has been let, and was also my PPR for a while some years ago.

There is about 150k profit in it after all the deductions I can think of.

It is owned jointly by myself and Mrs ASB. This will give rise to a CGT charge on about 130k - lots. I do not believe I can get any taper relief :-(

So here is the plan.

1) Me and Mrs ASB gift 10% each to our two children. [13 and 11] [If I die within 7 years then there is an IHT charge]
2) We sell it.
3) Mr and Mrs ASB pay shedload to Gordon (but at least it's a bit smaller)
4) Mr and Mrs ASB put the kids share in their bare trust [and we get taxed on the income as a privilege].
5) The kids pay a little CGT (on that amount in excess of their annual allowance).

In this way at least the kids use their CGT allowance so the gift to the kids only actually costs us 6%. [The kids share will genuinely be for them]

Does this work???

Alternative plan B.

Gift half to the kids now.
Don't die for 7 years.
When the kids are a bit older move them into it as their PPR.
Wait a while, kids move out, sell it.

We get CGT on the half we still own (the actual amount retained is unlikely to yield any CGT because of the incoming price verses the retained portion).

Here the kids don't get stuffed for CGT - they get the PPR exemption.

Does this work???


Or, any other ideas as to how I can work an exit strategy for an asset currently 250k which I bought for 80k ???

[Bear]

Not sure why you think you can't get taper relief?

anyway try this article - it may help

Taxation Web

[ASB]

Helpful article. Thanks.

Re the taper relief. I think that improves thing, but I don't think it qualifies as a business asset - it's let to individuals. It would be great to get the full 75% . I need to clarify this because it makes the problem go away.

If it is a non business asset I will only get stiffed on 60% of the gain. So that makes it a more manageable problem.

I weould still like to get the kids involed though - because essentially I can generate 100% of their CGT allowance to them rather than 60% to me and 40% to Gordon.

[Buffoon]

Semi-serious question/response. I knew of a couple in a similar situation with too properties. There plan was to separate pending a divorce with the husband living in one property and the wife + children in the other. After six months or more they would sell off the property in question and since it was a main residence it would not be subject to CGT. They planned to get back together again, but really did get divorced. I never found out if the plan would work, I suspect it would not.

[MarillionFan]

You will get some taper relief. I know it's now a lot.
I am paying only 85% of the profit I made on my last property. In addition, I have provided another 10k worth of receipts for doing the property up. Offset against capial losses and my CGT for the year.

[ChimpMaster]

Surely you can pay 0% tax if you don't tell Brown!

[simondolan]

Have you taken into account the 36 month deduction and the apportionment of time spent as PPR?

Drop me a mail if you need a hand.

Ok, I have a house I am planning to sell. This has been let, and was also my PPR for a while some years ago.

There is about 150k profit in it after all the deductions I can think of.

It is owned jointly by myself and Mrs ASB. This will give rise to a CGT charge on about 130k - lots. I do not believe I can get any taper relief :-(

So here is the plan.

1) Me and Mrs ASB gift 10% each to our two children. [13 and 11] [If I die within 7 years then there is an IHT charge]
2) We sell it.
3) Mr and Mrs ASB pay shedload to Gordon (but at least it's a bit smaller)
4) Mr and Mrs ASB put the kids share in their bare trust [and we get taxed on the income as a privilege].
5) The kids pay a little CGT (on that amount in excess of their annual allowance).

In this way at least the kids use their CGT allowance so the gift to the kids only actually costs us 6%. [The kids share will genuinely be for them]

Does this work???

Alternative plan B.

Gift half to the kids now.
Don't die for 7 years.
When the kids are a bit older move them into it as their PPR.
Wait a while, kids move out, sell it.

We get CGT on the half we still own (the actual amount retained is unlikely to yield any CGT because of the incoming price verses the retained portion).

Here the kids don't get stuffed for CGT - they get the PPR exemption.

Does this work???


Or, any other ideas as to how I can work an exit strategy for an asset currently 250k which I bought for 80k ???

[tim123]

Have you taken into account the 36 month deduction and the apportionment of time spent as PPR?

Drop me a mail if you need a hand.

And then there will be lettings relief as well.

tim

[ASB]

And then there will be lettings relief as well.

tim

It appears it wasn't my PPR. This changes the relifs. But at least the taper relief seems to go to 40% of the value, so that improves things.

[PerlOfWisdom]

Why not give the whole house to that nice Mr Brown. Then he'll have to pay the tax. Ha Ha.