Is capital gains tax payable if I gift or sell a property to my daughter?

I have two investment flats which are currently occupied by members of my family. One will become empty again soon so I am thinking of gifting or selling that flat to my daughter. Would capital gains tax be payable?

Question: My home is in Norfolk and I own two flats in London, which I bought as investments. I have had one of the flats for 10 years, and my mother lives in it. The other, which I have had for six years, has been let out to various tenants but is now occupied by my brother, who has recently divorced. He will be moving out soon to get his own place, so I am considering gifting or selling that flat to one of my daughters, who is moving to London. Would capital gains tax be payable?
 
Answer: Capital gains tax may be payable if you dispose of a property, unless relief is available to you. Accordingly, if you dispose of the flat by gifting or selling it to your daughter, the tax may be payable. On a gift between spouses or civil partners who live together, the recipient takes on the base cost of the donor so no capital gains tax is payable, but this does not apply to gifts to children.
 

Capital gains tax is payable on the profit or gain you make when you dispose of a property. If the flat had been your home, then principal private residence relief might have been available in certain circumstances.
 
The gain is usually the difference between what you paid for a property and the amount you sell it for. If you gift the flat, its market value at that time would be used to calculate the gain.
 
Do remember that some costs can be deducted to reduce the gain, such as estate agents and solicitors’ fees plus outlay for improvements, but not usual maintenance costs, such as redecorating.
 
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If you have a question for Fiona McNulty, please email legalsolutions@standard.co.uk or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually but we will try to feature them here. Fiona is legal director in the real estate group of Foot Anstey LLP in Exeter (fiona.mcnulty@footanstey.com)
 
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.


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