Question: What tax would I pay if I gift my daughter my share in a property?
I am a joint owner of a property since 2012. The other owner is my brother who was living in the property but is now in a care home so the property is empty. My daughter would like to buy my brother out of his share and I would be willing to transfer my share to her, but would I have to pay capital gains tax (CGT)? The property was left to my brother and I in a will in 2012. My brother hasn't been paying me any rent; the only thing I contribute to is to pay half the house insurance each year.
Arthur Weller replies:
Answer: You and your daughter are 'connected persons' so if you transfer your half of the house to her you do so at today's market value, for CGT purposes; see HMRC’s Capital Gains manual at www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14530 and cg14580. Therefore, if the market value of the house has increased since 2012 (presumably), you will have to pay CGT on your half of this increase (less your CGT annual exemption, currently (for 2020/21) £12,300).