Uncle Frank's gift of house

by **goldenfawn** on Thu Jul 02, 2009 10:12 am

My uncle wishes to gift a property to my brother. He (my uncle) owns two properties and has lived in both. He jointly purchased from the Council, with his brother, (the property to be gifted), on 9th January,1981 and it was their private residence. My uncle married late in life and moved away to his current home in December 1990 where he now resides as a widower. In March, 2005 his brother died and the property became his alone. The property has remained empty since March, 2005. I an told that Uncle Frank will be liable to Capital Gains Tax on the transfer.If the property is gifted on say 9th August this year would my calculation of the tax as shown below be correct?

Transfer/Market value 9.08.2009 175,000

March 1982 value (1/2) 10.000
Probate transfer value (1/2) 80,000 (90,000)
Gain 85,000

Private residence relief 119/331 months (30,559)

Revised gain 54,441

Annual allowance (10,100)

Assessable 44,341

I'm sure it won't be!

Also, my brother will sell his own home and move into the gifted house and proposes to give me from the proceeds a sum equal to one-half of the value of the gifted property.Would this transaction have any tax implications?

This, on reflection, seems quite long -winded, for which I apologise.

by **Peter D** on Thu Jul 02, 2009 11:19 am

You have forgotten that PPR was only introduced in March 82 so that is the ealriest date you can use for the PPR calculation and you also appear to have forgotten the 36 monthe PPR exemption as he actually lived there during his ownership. This makes it 140/328 resulting in a taxable gain of £38,620. Regards Peter

by **goldenfawn** on Thu Jul 02, 2009 11:37 am

Thank you Peter, it wasn't that I had forgotten, I didn't know that. Any thoughts on the second point?

by **Peter D** on Thu Jul 02, 2009 11:55 am

The gift to you will form a PET ( Potentially Exempt Transfer ) and if your brother lives more than seven years there will be no IHT implications. If your brother does pass away in less then seven years and his estate exceeds the IHT threshold of £325,00 then there may be some IHT due. Regards Peter

by **goldenfawn** on Thu Jul 02, 2009 11:59 am

Thanks once again.

by **Peter D** on Thu Jul 02, 2009 12:56 pm

Your uncle could gift it to both of you, and you genuinely 'sell' your half to your brother and there would be no PET against your brothers estate but of course still one against the Uncle. Regards Peter