Capital gains tax on Section 23 property

J

johassle

Guest
I wish to sell a Section 23 apartment to my daughter.
I am over 55 and it is my only investment. Am I liable for any Capital Gains Tax ?
 
If it's not your PPR, then yes, AFAIK. Depending on what else you may have already 'given' her, it may yet be worth your collective time to gift it to her..?
 
Principle Private Residence

Isn't Section 23 designed to give relief via capital allowances/annual write offs as opposed to CGT relief?
 
One thing you also need to consider is this, if you sell the property within 10 years of first letting, all relief granted will be clawed back/withdrawn.

A condition of qualifying for S.23 relief is that the property is let under a qualifying lease for a period of 10 years. So if it was your PPR, it would have ceased qualifying for S.23 relief. Also, if you are selling within the 10 year period, you may face a tax bill.

If you Google "Section 23" you will find the Revenue Guides on S.23

It may be worthwhile consulting a tax advisor as to how you should proceed in order to minmise your tax bill on disposal to your daughter.
 
With no other properties a section 23 property is not worth the premium you paid for it. You should sell it anyway. If you have been making the correct returns (subtracting mortgage interest and costs before calculating taxable income), then you should have used up very little of the S23 allowance. Therefore there will be very little claw-back. The clawed-back amount will be more than covered in the price.
If you are looking to sell to your daughter for her to live there I think it may be better to sell the S23 property, give her the money (as a gift) and let her buy a non S23 apartment.
I know that there are substantial transaction costs here but you will still pay CGT and legal fees and she as a first time buyer will still not pay stamp duty. She will however be able to get a better property for the same money if it is not section 23.
 
Thanks to all for your comments. I had thought that as I was over 55 and this was my only investment that a retirement relief applied and that capital gains tax was waived.
 
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