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Transferring property to your children


If I give a rented property to my child, what tax does she have to pay now and if she decides to sell it in the future, on what "purchase" price will she have to pay CGT (original or price at time of gift)?


Arthur Says


If a parent gives a rented property to a child, then the property is treated for tax purposes as though it crossed hands at present market value, even though the child paid nothing to the parent for it.


Therefore it is quite likely that the parent will be liable to capital gains tax on the transfer - but not the child.


If the child is under 18 and unmarried and the property produces rental income of more than £100 per year, then all the rental income, for tax purposes, is deemed to be the income of the parent, and they are taxed on it accordingly.


Otherwise the rental income is attributed to the child, and they have a personal allowance to set off against it, like any other taxpayer. If the child decides to sell the property in the future, then the acquisition cost they can use to set off against the sale proceeds, in order to calculate the capital gain, will be the value at the time of the gift.


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