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Where Taxpayers and Advisers Meet

Tax applicable on transfer or equity/gifted property

Keano1
Posts:2
Joined:Wed Jun 30, 2021 4:56 pm
Tax applicable on transfer or equity/gifted property

Postby Keano1 » Wed Jun 30, 2021 5:07 pm

Hi all.

Apologies if this question has been asked before. I currently live in my parents family home and my mother lives in a property which I bought around 6 years ago. There is no rental agreement between myself and mother.

I recently inquired about having the family home changed into my name only as my plan would be to sell the property further down the line. I'm concerned about the tax implications for both myself and my mother. The property is worth about £240k and is mortgage free. The solicitor wasn't very helpful and when I got no reply from their accounts department.

AGoodman
Posts:1288
Joined:Fri May 16, 2014 3:47 pm

Re: Tax applicable on transfer or equity/gifted property

Postby AGoodman » Thu Jul 01, 2021 1:10 pm

Their accounts department?

Anyway, a gift of the house would be treated as a sale at market value for capital gains tax so your mother would presumably make a gain. She could claim principal private residence relief for the period she lived there plus 9 months. This is applied to the gain in proportion to her overall period of ownership.

If the remaining gain is greater than her CGT annual exemption, she will have to pay CGT at 18% (if it tips her over the higher rate threshold it is 28% on the excess).

It's also a gift for IHT so taken into account if she failed to survive it by 7 years.

No SDLT on a gift.

More widely, she's also taking a risk that something happens to you (death, divorce, insolvency) leading to you losing the property she lives in, in which case she could be left homeless.

Keano1
Posts:2
Joined:Wed Jun 30, 2021 4:56 pm

Re: Tax applicable on transfer or equity/gifted property

Postby Keano1 » Fri Jul 02, 2021 9:29 am

Many thanks for the reply.


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