Grandparent to grandchild transaction.. Im confused!! need help.. CGT or Inheritance

Gambler0

hi desparately need some help.. currently trying to finalise a mortgage and finalise purchasing a house from my grandfather..

but he has hit a snag with either capital gains tax or inheritance tax.. im not 100% sure which one..

house is not his main home but his second home & is valued at 100k and he is selling to me for 70k..

does anyone know the process of whatever category it falls under?? please help asap.. thanks

Pee

Probably Capital Gains Tax - on the basis that he is still alive. This is on the increase in value since he bought to the £100k it is worth now. He should speak to an accountant about this asap.

If he dies within 7 years, then there may be Inheritance Tax to pay - this would be on the gift element of £30k.

00ec25

as it is not his main home and you are formally defined as a "connected person" therefore your grandfather will be liable to capital gains tax as soon as he sells that house.

given the above, your grandfather can sell the house to you at whatever price he wants, however, he will have to pay CGT based on the difference between the open market value (not the price you pay him) and what he paid for it himself

silvercar

Any gain he has made will incur capital gains tax. If this has been his home at any time the CGT liability is reduced.

If he should die within 7 years of the gift of the deposit, the gift would form part of his estate and could incur an inheritance tax liablity.

One further point, if he needs residential care in the next few years, he could be judged to have deprived himself of assets that could fund his care.