Holiday home owners sometimes want to give their property to another member of their family, but are dissuaded over concerns regarding large tax bills. So if you owned such a property and wanted to give it to a relative, would there be any tax due, even if no money is paid?
Taxes will be levied as if the property has been sold on the open market. With this in mind, it is a good idea to get a valuation on the property. Be aware that any increase in value during your ownership of the property could be liable to capital gains tax.
Any increase in value can be offset against your yearly £10,600 capital gains exemption amount. Any gain will be liable to tax of 18 or 28 per cent – depending on your personal income. If you ran the property as a furnished holiday let, this particular tax outcome may not apply, and you should talk to your tax specialist.
If your holiday home was your main residence – even for a relatively short period – then part or even all of your gain may be tax free. It is also worth noting that no stamp duty is charged on unmortgaged property that is given as a gift.
A number of our holiday home insurance customers may be confronted with issues such as this. In any situation of this kind, it is important to get professional advice from a tax specialist so that you aware of every potential tax outcome.