If you give away a property, perhaps to a relative, there are tax implications to consider.
If a property is given away or sold at less than market value, any taxes will still be payable as if it was being paid for at market value, provided that the person receiving it is a “connected person”.
So what is a “Connected person”? This includes family members – children, parents, grandparents (though not cousins) – as well as family trusts and businesses that are controlled by the giver.
Basically giving a property away is a disposal for capital gains tax (CGT) purposes. CGT is due only on a property that hasn’t been a main residence for the whole time you’ve owned it.
If the property has always been a buy-to- let, the tax is due on the whole period it’s been owned by you.
But if it has had a mixture of uses, such as a buy-to- let half the time and a main residence for the other half, the calculation needs to be adjusted There is an annual capital gains tax allowance of £11,100. Any gain above this is taxed at 18pc for a basic-rate taxpayer or 28pc for a higher-rate taxpayer.
When a rental property is given to a child who is under 18, the person who gave it away is still taxed on any rental income, even if that income technically goes to the child.
This doesn’t apply if the person receiving the gift is an adult, whatever their relationship to the giver.Share