Jennifer Adams looks at tax implications associated with gifting a property.
There are various situations when one person may wish to gift a property to another. This process brings tax implications depending on the circumstances, and whether the property is a main residence or a second property.
Capital gains tax
The basic premise is that should a property be gifted or sold for less than market value, capital gains tax (CGT) will be payable by the donor if the recipient is a 'connected person' (i.e., a family member, family trust). This rule does not apply if the sale is at 'arm’s length' between two unconnected parties. Gifts to a spouse or civil partner are generally deemed to have been transferred at a value that does not create a gain or a loss. Transfers of assets between spouses or civil partners under a formal divorce or separation
