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To mitigate income tax liability, a client transferred commercial property into the joint names of himself and his wife. However, only his share is eligible to capital gains tax entrepreneurs’ relief
My client owned two adjoining grade 2 listed commercial properties. Five years ago he transferred these into the joint names of himself and his wife to mitigate the income tax rates at that time. The properties are showing a substantial capital gains tax liability but only the husband’s share qualifies for entrepreneurs’ relief.
The commercial use will cease soon and there is scope to convert the properties to residential use where the potential future capital gains or rental income will be substantial.
Prior to seeking planning permission the proposal is to gift or sell the properties into a family trust or NewCo for the main benefit of the children and grandchildren. The project would be completed in some 18 to 24 months’ time and the units would then be sold or retained to generate a future rental income stream.
The husband and wife have...
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