Taxes due on gifted house

[Smiles]

Hi, I’m hoping you may be able to help guide me in respect of taxes due on a gifted property.
I've searched the forum for similar cases but can't find any close enough to give me 100% confidence to know how to calculate my due tax.

In Dec 1998 my parents signed over their house under deed of gift to myself (his son) and two of my brothers (all with equal share). My parents continued to live in this house rent free. My father died in 2002 and at the time the Inland Revenue determined that there was no tax to pay on his half of the gift. My mother continued to live in the property rent free until 2008, at which time she went into a Care Home (she was diagnosed with Alzheimer’s in 2002). From her savings she has been self funding her care up until March of this year when her funds eventually dropped below £23,800 and Local Authority support was applied for on her behalf. We are still waiting to hear from the LA.

The house was sold mid April 2011 for £195k and the proceeds split equally between myself and two brothers. After sale completion fee’s we were each left with £64055.

1.) Could you please describe how any due tax should be calculated on this gift?
2.) Is the Local Authority likely to have any claim on the capital from the house?

There was no valuation of the property at the time it was gifted (Dec 1998), but I estimate it may have been around £95k.
I pay income tax at the higher rate 40%

Thank you so much.

[pawncob]

There is no tax due on the gift, but HMRC might claim that as she resided there it was a gift with reservation and try and include it in her estate. If the value of this gift and her other estate exceeds £325k (or £650k if your father's estate was left entirely to your mother) there may be Inheritance Tax to pay.

I don't think the LA can make a claim as the gift was not an attempt to avoid contribution.

The Capital Gain on your sale will be the difference between the gift value (say £32k) and sale value £64055 taxed at your highest rate for CGT purposes (28%)