Capital Gains Tax enquiry

bobbins7

Hi there,
When my elderly father died after a long illness, my mother decided that she wanted to arrange for their home to be transferred to me and my sister. She was worried that if she had a long illness in the future thehome that she'd strived for all her life would be lost to nursing home bills etc. The solicitor was pants and I rather think he failed to explain her options fully so the transfer was done. I have no knowledge on such matters but have picked up that bacause my sister and I have our own homes we would be subject to capital gains tax if anything happened to mother and we sold her home.

Could anyone kindly advise me on this and any ideas on how we could avoid possible tax? The house is a modest one around 150 k I should think but its sad that alot of this hard earned cash may be lost and I owe ot to my pa to preserve it.

Thanks :rotfl:

goodscams

Has she recently transferred the property?

If so, assuming that you don't have any other capital gains and that the property is owned jointly then you will be able to benefit from 2 Capital gain annual exemptions was £8,500 for 2005/6. so even if the hose rose by £17,000 there would be no tax to pay. Plus you would be able to deduct legal and estate agents fees for selling the house so the gain could be over £20,000 and still pay no tax!

better planning might be that if you and your sister are married that you gift 25% of ownership to your respective wife and husband, therefore utiling 4 allowances taking you up to £34,000 of gain. though could lead to difficuilties in a divorce situation.

hope this helps

cheers
:beer:

Bossyboots

Can I just add that if ma needs care an investigation into the ownership and past ownership of her property will be done and if it can be shown that it is likely that the transfer detailed here was done to avoid care home costs then I'm afraid a court can still order the home to be sold to pay for it, effectively ignoring the joint ownership situation as this would be classed as a deprivation of assets. This will be particularly easy to prove if ma still lives in the house alone and the two other owners have their own properties elsewhere that they are living in.

This may not have been explained to her at the time as it is only relatively recently that properties have been able to be considered is this way, but it does apply retrospectively.