Property Gift vs. Sale Tax


Imagine you want to hand over a prime piece of family land to your daughter, Wanjiku. You have two choices: pack it up as a beautiful Gift with a shiny bow, or write up a Sale agreement and change ownership.
Most people think, "It's my property, I can give it away for free without the taxman noticing, right?"

Well, not exactly! But here is where the plot thickens. In many tax jurisdictions, selling property triggers a Capital Gains Tax (CGT), 
which stands at a hefty 15% of the net profit.
However, if you Gift that very same property to your immediate family (spouses or children), the law often grants a magnificent escape card: An Exemption from Capital Gains Tax! 

Not only do you skip the immediate 15% tax hit, but your children also get what we call a "step-up in basis." This means if you bought the land for $10,000 ages ago and it’s now worth $100,000, their starting cost is locked in at today’s $100,000 value. If they sell it later at that price, their taxable profit is $0.

The Catch? Stamp duty (usually 2% to 4% depending on whether it's urban or rural) still applies to transfer the registration, unless local laws offer specific family exemptions.
Before you make a move, ask yourself: Is it time to pass down the family wealth tax-free, or are you ready to split your hard-earned profits with the government? 

Talk to a tax legal advisor today to draw up a proper deed of gift!

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