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I'm thinking of buying a 2nd property. I'm told that Capital Gains Tax (CGT) and Inheritance Tax (IHT) might bite upon eventual transfer or sale. Obviously, I'd like to avoid this if possible.

3 questions:

1. If i haven't yet bought the property is there a way i can legitimately avoid CGT upon eventual sale of the 2nd property that is too be purchased?

2. If that property is to be bought abroad, does it effect anything?

3. I have a 4 month old baby. Is there aything preventing me buying a UK property in the baby's name? Does the answer differ if the 2nd property to be bought is abroad?

4. If the 2nd property has already been bought, can it be transferred into the name of the baby without attracting CGT or other Tax implications?

2006-09-16 01:40:37 · 5 answers · asked by appw 1 in Business & Finance Taxes United Kingdom

5 answers

Gosh, a number of questions all wrapped together.

1. It is very difficult to avoid CGT altogether. But there are a number of reliefs that may mitigate the problem. It helps if it is, at some time, your main residence. Then the principal private residence relief applies to the period of residence plus the last three years in any case. If it is let then lettings relief could further reduce the liability. Taper relief will also apply and increases with the length of time the property is owned.

2. If you are domiciled and resident in the UK then you will still be taxed in the UK on any gains. Double taxation relief will usually apply so you will not be worse off than if the property was in this country but you can neot be better off.

3. Not sure on this one. If you invest cash in the name of your daughter then any interest earned would be assessed on you. I suspect the same will apply to income from property.

4. (I thought you said there were three questions?) This transfer would be between "connected persons" and would be deemed to have been carried out at market value. This may give rise to a capital gain.

2006-09-19 09:08:29 · answer #1 · answered by tringyokel 6 · 0 0

If you have two properties in the same area (eg both in London, not one in the north and one in the south) you tell the taxman which is your main property. Once you've done this you can change which one is your main whenever you like. This way, when you come to sell on, you make that the main property again and therefore there's no CGT. As for children being owners or part owners you have to prove that they lived there and contributed to bills. This should be easy enough even if you get them to open a bank account with that address on plus have a bill in their name, even if you pay it. Its a really complicated area this one..Property bought abroad is probably even trickier.

2006-09-17 00:54:42 · answer #2 · answered by Jackie 4 · 0 0

If you live in Canada and you purchase something for a child under the age of 19 (court considers them infant until they turn 20) and give it to them then it is considered a gift. I have a Rockwell Special Poster, my father gave to me in 1949 for my birthday, since it was a birthday gift. If I now choose to sell it, I do not have to pay tax or even report to tax department, any capital gains I may make, because it was a gift to a child under the age of 19. Phone H&R Block they can give you and answer.

2006-09-16 01:54:41 · answer #3 · answered by twentyeight7 6 · 0 0

best get it checked out legally, but i'm going to do the same to my daughter, i do know you can will property etc and as long as you survive 7yrs past that date capital gains isn't eligible.

2006-09-16 01:49:54 · answer #4 · answered by Anonymous · 0 0

sorry i am not abreast with tax laws

2006-09-16 17:05:39 · answer #5 · answered by gal-next-dr 4 · 0 1

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