Question:
I would like to gift my buy-to-let property to my son. I still have a £60,000 mortgage remaining on the property and I also own another property which is my main residence. How do I go about gifting the property to my son and what are the tax implications?
Arthur Weller Replies:
Because your son is considered a 'connected person' to you, and because you are gifting to him, it is deemed, for taxation purposes, that you sold it to him at 'present market value' (PMV), even though he gives you no money at all for it. The PMV is what you could normally expect to get for it if you sold it to a non-related third party on the open market. If the PMV is more than you paid for it, then you will be liable to capital gains tax (CGT) on the difference.
There won't be any stamp duty land tax on the gift because he is not paying you anything for it. In order to reduce your exposure to CGT you could consider transferring only a portion of the property in this tax year, so that the amount of the gain triggered is matched by your CGT annual exemption (currently £10,600), and doing the same thing in the following year and subsequent years.
