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Hello and welcome to the site. Thank you for your question.
If you gift the property to your daughter, it would be deemed gifted at market value.
The recipient of the gift receives it tax free.
Tax implications for your consideration are:
Capital gains tax -
The difference between market value and the cost price (including associated costs of buying and transfer of property) would be your gain and it would be chargeable to Capital gains tax. As the property is jointly owned with your wife, each owner would be able to claim gains annual allowance of £10,900 against the gain and the balance would be charged CGT at 18%, 28% or a combination of both depending on your total taxable income in the tax year.
Inheritance tax -
This gift would be regarded as a potentially exempt transfer for IHT purposes and the seven-year rule would apply. If you survive for 7 years after making the gift then it would be exempt from your estate for IHT calculations.
More information of seven year rule can be found here
I hope this is helpful and answers your question.
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Ok thanks for this answer.
Is there any difference to any of the costs if we set up a discretionary trust? Or is gifting to the trust the same as gifting it outright to an individual? If that is the case then what is point of trusts??
Sorry - do I have to make another payment to ask the additional question?
Ok - yes this is related to my original question.
Is there any difference to any of the costs if we set up a discretionary trust instead of gifting the property direct to our daughter? Or is gifting to the trust the same as gifting it outright to an individual? If that is the case then what is point of trusts??
Sam thank you for your reply.
There is difference on CGT treatment when you sell an asset held in trust.
You lose control of the asset if it is gifted outright where as the trustees remain legal owners of assets held in a trust.
More information on CGT for Trusts can be found here
More information on discretionary trusts can be found here
I am not an expert on Trust law and I would recommend you seek legal advice on merits of gifting direct or via discretionary trust before you make your final decision.
Ok thanks - I appreciate you may not be fully conversant with Trusts but does "Just Answer" have anyone who is? Are you able to forward my query to someone?