BTL Tax part ownership transfer

[BiggieBig]

Background:
My self and my father have a shared BTL flat. I earn majority share however my father wishes to gift 1/2 he’s share to myself and I buy out the remaining he owes.

Any flaw in my plan:

Total gain= (%owned x current Valuation) - (original deposit + improvement costs)


Tax due - (assuming no gains for the year)
My father Pays tax on capital gain on the portion I wish to purchase.
Tax due = (Capital Gain allowance - (50% x Total Gain)) x 18%

Amount gifted to me (for me to declare on my return)
= (%owned x current Valuation) + Original Deposit

Now on this gifted amount can I defer this payment until flat is sold.

something like this.
Hold-Over relief

HM Revenue & Customs: Capital Gains Tax reliefs on property that's not your main home

What needs to be done to put this into action

- Title deeds to be changed to reflect change in ownership
- fathers return to show he’s portion sold and pay tax bill above
- my return declare gift on amount above

[Syntyrion]

Background:
My self and my father have a shared BTL flat. I earn majority share however my father wishes to gift 1/2 he’s share to myself and I buy out the remaining he owes.

Any flaw in my plan:

Total gain= (%owned x current Valuation) - (original deposit + improvement costs)


Tax due - (assuming no gains for the year)
My father Pays tax on capital gain on the portion I wish to purchase.
Tax due = (Capital Gain allowance - (50% x Total Gain)) x 18%

Amount gifted to me (for me to declare on my return)
= (%owned x current Valuation) + Original Deposit

Now on this gifted amount can I defer this payment until flat is sold.

something like this.
Hold-Over relief

HM Revenue & Customs: Capital Gains Tax reliefs on property that's not your main home

What needs to be done to put this into action

- Title deeds to be changed to reflect change in ownership
- fathers return to show he’s portion sold and pay tax bill above
- my return declare gift on amount above

No - the right formula is:

Total gain = current Valuation - (purchase price + improvement costs + [speak to your accountant or a solicitor about the full list of things you can include])

then:
Dad's gain = Dad's % owned x Total gain
Your gain = 0 as you're not selling / disposing of anything.

Your dad will pay CGT on capital gain on both the portion he sells to you AND the portion he gifts to you. So:
Tax due = His Total Gain - Capital Gains allowance (£11k this year)) x 18% (or 28%, if he is higher rate payer)

You should not need to declare it - but there may be inheritance tax payable if your dad dies within the next 7 years and in certain circumstances e.g. depending on the type of assets.

None of the above is legal or tax advice though. You REALLY need to speak to a solicitor or accountant about this issue (particularly around inheritance tax etc) and your practical questions.