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Another properties problem

The recently posted "Property transfer problem" has prompted me to ask about our situation.

We have a house in Suffolk where we live which we own outright, no mortgage. We also have a flat in North London which has an almost paid off mortgage on it, I think there's ten or twenty thousand pounds left to pay off.

We lived abroad for ten years or so in the seventies and eighties and bought the flat as a place to live when on leave in the UK. Since we came back permanently in 1987 it has been rented commercially some of the time, has been empty for periods and has been used by friends and family. Currently our daughter is living there and, while she is still not earning, is paying little or no rent.

We are considering moving abroad again in the next year or two and, after an overlap, may well sell our house in Suffolk. Since this is our primary residence I can see no major tax implications there.

However I'm a bit in the dark about the flat, what would be the best way in the long term of (maybe) transferring it to our daughter or (if she decides not to stay in London) of realising its value tax efficiently?

Reply to
usenet
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You didn't say when you bought the Suffolk house. If it was before

1987, there could be some CGT due if ever you sold it.

The trouble is, if you give it to her, or sell it to her, that would realise the gain and CGT would become due. In addition, if you give it to her, 7 years would need to elapse before you die if IHT is to be escaped. There again, if you're into IHT planning, you'll need to think what to do about your other assets too, not least the Suffolk house.

It may be more effective just to bite the CGT bullet, in which case a sale would be preferable to a gift. It would need to be at market value, but you could lend her the money to buy it off you, and it would be up to you whether to bother charging interest. Also, you could gift her up to £3k each per year towards reducing the debt, without IHT implications.

Reply to
Ronald Raygun

We've had a UK house of some sort continuously since 1972, I think we may have had only the flat for a few years while we were overseas. We've had the flat since 1981/2 or so, three houses since we returned in 1987. (That's three different houses one after the other, not all at the same time!)

Yes, it's the IHT thing that's one of the things that's beginning to look relevant.

Thanks for the ideas.

Reply to
usenet

If they move abroad might they get advantages from being resident out of the UK?

For example, does Belgium still have CGT at 0% and could it be applied to the house sale?

Stephen

Reply to
Steve Maudsley

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