Gift from Mother to Son - Stamp duty

by dp on Wed Jul 28, 2010 10:50 pm

Hi,

apologies if this question was already asked and answered..

I am wondering what is the best way for me to 'buy' my mother's house. Its actually a house that I grew up as a child and its been in the family for almost 20 years.

There is no mortgage outstanding and my mum has moved out to another flat (now myself and my wife live in it and pay rent to my mum, but would ideally like to formalise this by having the house transferred into my name).

I was told that best way is for my mum to 'gift' me the house and that there is something to do with her staying alive for 7 years? Can anyone explain this for me?
Also, what happens if I subsequently mortgage the house?

The house is worth approx £350k.

by **lilly** on Wed Sep 29, 2010 5:16 pm

i believe if she gifts you the house, there should be no exchange of monetary means.
So if you give 350 000, then it isnt really gift.

I am not a tax specialist so cant advise further.

by **section 44** on Thu Sep 30, 2010 11:22 am

If your mum gifts the house to you then you will not be liable to stamp duty land tax (because you would not be giving any consideration for the house).

The disposal by your mum would be deemed to occur at market value for CGT purposes. Provided that your mum lived in the house as her main residence throughout her period of ownership (ignoring the final 3 years) then the disposal would benefit from private residence relief and no CGT liability will arise for your mum.

The gift would be a potentially exempt transfer for IHT purposes. Provided that your mum survives for 7 years following its transfer, no IHT will be payable. If your mum were to die during that period then the value of the gift (or a proportion of it) would form part of your mum's death estate and a IHT liability may arise (depending on the value of that estate).

If you subequently mortgage the property then this will have no bearing on the above.