Capital Gains?

Question

If I currently own two houses, I know I am liable to CGT on one which is not my main residence. Is there anyway to avoid this, such as transferring this into my mothers name?? Im in the uk

Answer 1

Normally, if you transfer something into someone else's name, you're making a gift, and in the US, you'll pay a gift tax.

I don't know if you have a similar rule, but if you were to move into the house and make it your residence for 2 years, you'd satisfy the "residence" rule and get an exclusion amount on the gain.

Here's a web site where you can look this up:

http://www.hmrc.gov.uk/cgt/

Answer 2

The transfer into your mother's name would be a transfer between "connected persons" and you would pay CGT as if it had been sold at full market value.

Are you letting the other house?

The best way of reducing the tax liability is to move into the second house for some time and establish it as your main residence for that period. Then you will be able to claim private residence relief for the last three years of ownership (and the period of actual occupancy if that was earlier).

If it had been let the there is also lettings relief which is equal to the lower of -

the amount of private residence relief,
the actual gain or
£40,000.

Don't forget that taper relief kicks in once you have owned the property for three years.

You also have an annual exemption which will reduce the chargeable gain even further.