This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

To Gift or to inherit overseas property?

swandive
Posts:16
Joined:Tue May 26, 2015 1:03 pm
To Gift or to inherit overseas property?

Postby swandive » Fri Oct 05, 2018 2:27 pm

My wife's mother (a Serbian national) has been diagnosed with terminal cancel so the question is, should the mother gift her Serbian property to her daughter (my wife) while still alive or should it simply be inherited after her death?
Either way, once the mother has passed the intention is to sell the property and transfer the funds to UK.

Which method if any would accrue less tax liabilty here in the UK?

Pertinent info:
- My wife is dual UK/Serbian nationality and resident in the UK
- Value of property <100k euros


thx in advance

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: To Gift or to inherit overseas property?

Postby SteLacca » Mon Oct 08, 2018 9:39 am

Neither method would incur a tax liability in the UK. There may be tax consequences in Serbia, and these should be looked into via an appropriate specialist there.

With regards to disposal, the normal rules for CGT will apply. i.e. the gain will be calculated by reference to the difference between the sale proceeds and the acquisition costs. Whether the property is received via inheritance or gift, the acquisition cost will be deemed to be probate value or open market value respectively at the time of acquisition.

swandive
Posts:16
Joined:Tue May 26, 2015 1:03 pm

Re: To Gift or to inherit overseas property?

Postby swandive » Mon Oct 08, 2018 9:51 am

Neither method would incur a tax liability in the UK. There may be tax consequences in Serbia, and these should be looked into via an appropriate specialist there.

With regards to disposal, the normal rules for CGT will apply. i.e. the gain will be calculated by reference to the difference between the sale proceeds and the acquisition costs. Whether the property is received via inheritance or gift, the acquisition cost will be deemed to be probate value or open market value respectively at the time of acquisition.
SteLacca, many thx for your reply

for clarification, when you say "Neither method would incur a tax liability in the UK", which type of 'tax' are you referring to? Inheritance?

thx

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: To Gift or to inherit overseas property?

Postby SteLacca » Mon Oct 08, 2018 11:24 am

Inheritance tax is paid by the estate, not by the beneficiary (except, potentially, where a failed PET is involved). Since the bequest originates outside of the UK, then it cannot be subject to UK IHT.

Outright gifts do not give rise to a tax liability on the recipient (though certainly in the UK, may become a PET for IHT purposes, and so need to be tracked). In your situation, all references to IHT will be according to Serbian tax laws, which is why you need advice there.

swandive
Posts:16
Joined:Tue May 26, 2015 1:03 pm

Re: To Gift or to inherit overseas property?

Postby swandive » Mon Oct 08, 2018 12:03 pm

Great. Many thx for your input


Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”