Buying house from Mother

[paul bridges]

My father died last year, leaving my mother to manage a number of buy to let properties. I propose buying two of the properties - one to live in, the other to manage the flats, to relieve her of this burden. What are the tax implications? My mother bought the properties for 250K, spending 100K on renovations.

Specifically, how will the market value of the properties be assessed for tax purposes? Say, the properties were valued at 1 million and I paid my mother 800K. Would she still be liable for CGT (or other?) on the remaining 200K (we have had a range of valuations - 800K to 1m)? Can we define the market value? Also, the properties require extensive renovation - can this be deducted from the "market value" (thus giving a justifiable purchase price of 800K)? I guess there may also be future inheritance tax issues? Thanks for your help.

[Ian McTernan CTA]

As you are connected persons, the properties will be deemed to be sold for market value (as determined by the District Valuer if necessary), so you can buy from your mother for whatever price you deem appropriate, with possibly a large saving on stamp duty.

Renovation costs will be deemed part of the acquisition cost when it is time to sell.

Inheritance tax could play a large part in the future and you need to seek professional advice regarding estate planning for the family.

Regards.

Ian McTernan CTA
McTernan Associates Ltd
ian@imcternan.com