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Old 27th March 2019, 22:29   #11 (permalink)
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Re: Confused... Turkish wills.

Quote:
Originally Posted by enoch View Post
You could of course always , make a Bare ownership on your property which allows you to live in it until death and it goes to the new owner who ever's name you put on the Tapu , It is just like selling your house but you are giving it away ,to save tax duty It's on Yellali just got an email today .
Thanks Enoch, worth looking into.
https://yellali.com/news/article/528...for-a-property
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Old 28th March 2019, 10:14   #12 (permalink)
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Re: Confused... Turkish wills.

Be very careful of the interaction with UK inheritance tax laws. Depending on the values of your assets and your residency status in UK, you could be making a real difficulty for the future.If your Turkish property is valuable, and you are a UK domiciled taxpayer, get some UK professional advice first.

First point:
HMRC would probably say that a move to bare ownership would be deemed a 'capital lifetime transfer' , and the value of the transfer away from you would be offset against your inheritance tax nil-rate allowance for the next 7 years. If the value is over the 325k allowance the excess is taxed at 20%.
They might also take the view that giving away some of the property is what they call a 'deemed disposal' and charge capital gains tax instead, even if no money changes hands. I've seen it happen where property is given away that is not your main residence.

The UK currently doesn't charge capital gains tax on profit from sale of your home, but Turkey charges capital gains tax on any property sale if owned for less than 6 (?) years. I dont know if that would apply to this, but logic suggests it would. There will in any case be a belediye tax to pay on the transfer value.

Second point,
if you retain the right to live in it until death the transfer would be a 'gift with reservation of benefit', in other words HMRC would say that you hadn't really given it away. To get over this you would have to pay a market rate of rent to the new owners and provide a proper tenancy agreement, and keep all records for the future. The landlords would have to pay all the maintenance costs and repairs.

Third point:
the new owners would have to declare the rent for tax purposes both in Turkey and in UK, and if they later divorced or were bankrupted the property would be included in their assets to settle their liabilities. This could lead to a charge against the property at the very least, and possibly you could be forced into a sale.

Fourth point,
when the new owners eventually inherited or sold they would have a capital gains tax liability.

However, if the property is only low value, below the current 325k allowance, or if you are now a permanent resident in Turkey and will have left the UK permanently for at least 17 of the last 20 years when you die with no UK taxable assets, things might be simpler.

Tax laws will always change however and nothing is guaranteed.
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Last edited by Kanga; 28th March 2019 at 17:36..
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