My Sister Giving Me A House Help

lorrigirl29

HI YOU CAN LOOK AT THIS IN 2 WAYS BUT I NEED HELP my sister wants to give me a house i have lived in for many years iam not suer weather it has been some sort of trust thing for me or what but my issue is how can she give me it without havnt to pay inheritance tax or out else

iv heard she can sighn it over to me without payn any tax but if the worst would be to happen it would have to go back to her estate but after 7 years it would become legally mine CALL IT A GIFT .

is this true or could she sell it to me for say £100 pound or would i have to pay any tax THANKS

ceeforcat

Oh my God - where do we start on this one? there are CGT specialists on these pages but as a start:

1) you certainly won't be paying any tax

2) Did your sister ever live in the house?

3) Is she the only registered owner?

4) What did she pay for it and when was that?

5)The amount you pay for it is irrelevant (even if gifted)- it is the value at the time of transfer which counts. What is that?

6) The inheritance tax angle is largely correct other than the fact that it is legally yours from the moment it is transferred.

7) Can you be a bit clearer regarding the 'trust thing'?

lorrigirl29

1 no she never lived hear
2she is the only reg owner
3 £10,000 10years ago
4 was valued £80,000 last year my be £50,000 now
5 think we got some inheritance money as i was young and wild she took charge of it and a good thing now she bought the house now iam seattled down she wants to give it to me


i just need to know how not to pay tax on this thanks.

CLAPTON

a. your sister can give you the house

b. she will be liable to pay capital gains tax if the vlaue of the house has increased since she bought it because giving it to you is a disposal for CGT purposes

c. if she dies within 7 years then the value of the house will be added to her estate for IHT purposes... the estate will pay the IH Tax (if her estate is big enough for IHT to be liable).

you have no direct liability for tax

lorrigirl29

thanks is there a way round it were neither of us have to pay ih tax or any money suerly there must be a way of faimly givn a nother faimly member a house with out havn to pay loads of money out thanks.

sloughflint

lorrigirl29 wrote: »

thanks is there a way round it were neither of us have to pay ih tax or any money suerly there must be a way of faimly givn a nother faimly member a house with out havn to pay loads of money out thanks.

To give you an idea,the current IHT allowance is £ 312 000 so I wouldn't worry too much about IHT unless your sister's total assets come to more than this.Even then she'd just need to survive 7 years.

I can't see any way of getting around CGT though. It's a shame your sister put the house in her name only if the inheritance was for both of you ( from your point 5?). Had you both owned the property, her GCT would have been reduced. Too late now though I suppose.

lorrigirl29

ok then how much cgt would need paying if thats what we have to pay thanks

CLAPTON

CGT works this way

valuation at time of transfer 50,000
purchase price 10,000
so gross gain is 40,000
less CGT allownace 9,600
30,400
tax at 18% i.e. 5,472

However, if the house was originally bought for your benefit by money left to you in a will then it would be possible to argue that you are anyway the beneficial owner and so no tax is due.

It wowuld be worth finding out exactly what happened when the house was bought.. was there a will, who died etc etc.

lorrigirl29

thanks less CGT allownace 9,600

do i have to pay that 9,600

or would it be that i pay 5472

is teh 5472 the only price i pay altoghether and would it be better to get my house valued at the lowest price possiable

sloughflint

CLAPTON wrote: »

However, if the house was originally bought for your benefit by money left to you in a will then it would be possible to argue that you are anyway the beneficial owner and so no tax is due.

.

Would that still be the case if the sister used some of her inheritance?

OP, was the house bought with your inheritance money or both of yours?

sloughflint

lorrigirl29 wrote: »

thanks less CGT allownace 9,600

do i have to pay that 9,600

or would it be that i pay 5472

is teh 5472 the only price i pay altoghether and would it be better to get my house valued at the lowest price possiable

The £ 5472 would be your sister's CGT liability since she wasn't living in the property.

Ignore the £9600. That is used in the calculation. Everyone is allowed a gain in value of £9600 before CGT becomes due.