Shared property gifting query

[southcoastmummy]

Hi all - on paper I own 2/5ths of a family property, the other shares being owned by my 2 aunts and uncle. For a variety of reasons I have had no financial investment in this property, do not live in it, or wish to have any influence over the future of it. At some point in the future this house will be sold and while currently I would have an entitlement to a share of any proceeds, in reality two of the other shareholders have been paying upkeep costs and so should benefit.

I would like to gift my shares back so that only my aunts and uncle gain on their investment in the property and I hopefully, have no liability for CGT.

My relatives have very little disposable income and are financially naive so have left this process up to me.

Would a financial advisor be able to advise on transfer of property rights or would it be a solicitor? Also I've had conflicting advice that it's easier/cheaper for me to instigate the transfer or its easier for the three other parties to remove me from the deeds.

Any guidance would be really helpful. I will obviously seek real life advice but don't really know where to start!

It probably depends how the ownership of the property is structured. You should definitely consult a solicitor rather than a financial adviser.

Solicitor for the legal aspects. It sounds quite complicated. There might be CGT, particularly as the annual exemption has fallen to £6k for the current tax year and will drop to £3k from 6 April 24. Market value is substituted for proceeds for gifts. Also if you do have a liability and it's a residential property you'll need to do a special return and pay the tax within 60 days.

Thank you, sale of the property is not expected in the short to mid term as relatives are expected to stay living in it until their deaths, its more sorting legal ownership ahead of any future sale.

I'm thinking ahead for any potential inheritance issues as well as CGT in the most cost efficient way

I think they mean that there might be CGT assessed on your portion on transfer.

I think if you simply want to sign your share over, you can do this via the Land Registry

Yes. OP if you gift your share of the property to your relatives now, that's a disposal for CGT purposes and might give rise to a CGT liability depending on the history and values.

I'm not sure you should do that if they are the generation upwards.

Even if you gift to a relative you still have to pay capital gains tax on the market value of it, or tax on the gain in value from the time you inherited.
I looked into it when I inherited a property but was considering transferring ownership to my adult children. In the end I sold it, split the proceeds between them and paid CGT.

Thanks everyone, I think it's looking like I'm best to wait until the other shareholders wish to sell, deduct any CGT liability from my proceeds then share out the remaining cash. No-one wants me to be financially penalised but equally I don't want to financially benefit from an asset I had very little investment in.

Depending on how much your 2nd home owner stamp duty was and if it is still within the refund period then it may balance out with the CGT. Worth working it out.

How long have you been a part owner & was ownership inherited? If under two years is a Deed of Variation an option? If you remain an owner keep in mind that has implications for stamp duty if you purchase a property or move - you would be liable for the additional 3% surcharge which is on the full purchase price.

Deed of variation is possible within 2 years.

I would wait to see how you feel at the point in time when the property is actually sold. What if you really needed the money at that point? I wouldn’t be so quick to give away something that was legally mine.