CGT on Mothers property

[AT]

My mother has a property in her sole name which does not have any mortgage. She has not resided in for a number of years. The property has been let by me for several years and I have received rental inform from it and have accounted for the tax thereon.

My question is that were my mother to transfer the property to my myself (only child), given that she can prove at some stage previously that this property was her principal private residence, I assume there will be no tax due on any transfer? An alternative solution is for the property to be transferred in a similar way, although to a corporate entity where we both could be shareholders. How would that effect any CGT liability?

[maths]

As it appears you have neither a beneficial nor legal interest in the property you cannot have let the property and you are not entitled to any income from it.

The income is your mother's and she should have ben declaring the income, not you.

[AT]

Hi
Thank you for the reply. In relation to your reply, I can say that the matter of who is in receipt of the rental income was actually put in writing to the HMRC. HMRC did kindly reply in writing stating that given that I am in receipt of the rental income that it should be me that accounts for the tax on any income which I do do.

Is there any advise you/anyone can give to me in relation to the original question that I have posed on the forum please?

regards

Asgar

[bd6759]

It's an unusual situation. Normally HMRC will assess the owner of the property, but the law says that the tax is payable by the person receiving or entitled to the profits (S271 ITTOIA 2005). That basically gives them the choice of who to assess. In the circumstances you describe, I think taxing you is fair.

Your mother will still be charged to CGT when or if the property is sold. Although it may have been her home, that was some time ago. The total gain will be apportioned, split between the period it was her home and the period that it was not her home.

Transfering it to a company is also a disposal liable to CGT, and is likely to generate additional tax liabilities, including SDLT and possibly ATED.

[AT]

Hi
Would the option of transferring to a company and the tax that might be due also be the case where the property does not have any mortgage charge?

[maths]

You say:

The property has been let by me for several years

What do you mean?

You may receive the rents but presumably your name does not appear on any lease/rental agreement?

[bd6759]

Hi
Would the option of transferring to a company and the tax that might be due also be the case where the property does not have any mortgage charge?

Mortgage has no effect on the tax charge