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Where Taxpayers and Advisers Meet

CGT ON GIFTED PROPERTY AS PRIMARY RESIDENCE

SNOPAKE
Posts: 1
Joined: Mon Dec 03, 2018 12:59 pm

CGT ON GIFTED PROPERTY AS PRIMARY RESIDENCE

Postby SNOPAKE » Mon Dec 03, 2018 1:06 pm

Hi

My dad is now getting older and struggling. He has asked me and my family to move into his home rather than him sell his. The plan is to sell my property and make his house my primary residence with him still living there. Is he able to gift the house to me without any capital gains tax or IHT repercussions? Or would it be easier for me to buy the house at market value today with a gift from my dad to partially reduce the cost? Is there an easier way to make this more cost effective?

Thanks in advance.

AGoodman
Posts: 710
Joined: Fri May 16, 2014 3:47 pm

Re: CGT ON GIFTED PROPERTY AS PRIMARY RESIDENCE

Postby AGoodman » Mon Dec 03, 2018 6:47 pm

Gifting the whole property is fine for CGT provided it is his PPR. However, it will be a reservation of benefit for IHT so will remain in his estate. He could avoid that if he only gave you half (or possibly a greater share) and continued to pay his share of the outgoings. The legislation just says a gift of "an undivided share of land" but HMRC have "views" on the application of this exemption where the donor has given a very high proportion.

A purchase of the house at an undervalue (or with prior gift from father) is a bad idea. It would just be a reservation of benefit (without any exemption) and you may incur SDLT as well.

The main issue you need to ask is whether there is any benefit to him gifting you the property. If his estate will not be subject to IHT (after nil rate bands and transferable nil rate bands of up to £1m), there is no great need to transfer it.


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