TAX IMPLICATIONS

[GGOI71]

My mother owns propety in the uk but is domiciled outside the UK, we (family including mother) would like to raise finance on this property to buy another property. We then intend to do up and the sell the old property after we have moved into the new property.

We have been told that we cannot raise finance on the property if it's in my mother's name, however,
Since her children are all resident in the UK, should she gift the property to them and they could raise finance on the property.

Questions:
1. Is this all correct?
2. What are the tax implications of this, will the we be liable for capital gains tax or Inheritance TAX.

Gee

[Nigel Lord]

Gee

There is no statutory reason why your mother's domicile (or indeed residence) should preclude her from raising finance on a property.

It may certainly be possible to gift the poerty to other family members, but there may be CGT and Inheritance Tax implications depending on your mother's status.

You will need to provide more detailed information to receive full and accurate advice. (For example, how do you know that your mother is not domicled in the UK? What is the status of each member of the family? What are your overall objectives.)

If you would like definitive advice, please would you contact us and we will advise on the information required.

Nigel Lord
Lord Associates
Caxton House
Old Station Road
Loughton
Essex IG10 4PE
020 8508 1642 & 07769 931852
lordassociates@ntlworld.com

[pffitch@sayersb.co.u]

Your mother may well be resident here for Capital Gains tax purposes and therefore a gift could result in substantial capital gains. Also if your mother has been in the UK for some time she may be resident here for inheritance tax purposes and therefore the gift could be a "Potentialy Exempt Transfer"

I imagine she can't raise a mortgage on it as she is resident abroad. Has she tried raising funds in her country of residence on this property?

If she is "not ordinarily resident" in the UK she may be able to arrange her affairs so that she pays no capital gains tax or Inheritance tax. However, care should be taken if she returns to the UK to live in the new property with her family!

This is a very complicated area with many aspects to consider. Please take professional advice.

Paul Ffitch
www.sayersb.co.uk
pffitch@sayersb.co.uk