I own a 50% share of my daughter’s home, a one-bed flat. She bought her share with a mortgage and savings and about ten years ago I paid cash for the other half with the intention of gifting it to her, which I am now ready to do. She has lived in the flat for the whole time and the increase in value is about £150,000, or £75,000 each. Will I be liable for capital gains tax (CGT) on the increase in value of my 50% share? If yes, would a deed of trust make it CGT exempt? I assume that provided I live for seven years from the date of the transfer, it would become free of inheritance tax (IHT)? 

Arthur Weller replies:  

You will be liable to CGT on your half since, as you have written, it has increased in value while in your possession. It is not clear what you mean by a 'deed of trust'. Perhaps you mean that you write today a declaration of trust that since day one, you have owned this property purely as a legal owner, trustee or nominee, but the beneficial owner of your half has always been your daughter. However, this does not fit with your previous words ‘with the intention of gifting it to her, which I am now ready to do’. Where you state: ‘provided I live for seven years from the date of the transfer, it would become IHT free’, that is correct.