Capital gains tax

Mrmorden21

Hi there

I am unsure if this is the correct place for this question, so apologies in advance. Ok, in a nutshell -

My mum has taken legal guardianship of my aunt who has autism (mild form). My mum has put her name on the house ( they have both contributed to it for many years, but technically my aunt has paid the mortgage, which finished in 1990's). Anyway, my uncle wants to buy half the house ( it is worth around 130K) to enable my mum to completely re do the house with new bathroom, loft conversion etc etc. Anyway my mum asked me if I would like some of it in order to achieve my ambition of becoming a pilot. Obviously I said yes.

What i need to know is - is there a way that my mum can give me a chunk of it whilst not paying capital gains tax? Basically I want her to pay as little capital gains as possible. My mum has worked hard for 40 odd years and I want her to not pay as much to our governemt as possible. Also becuase she does not earn that much at the minute (under 15k a year).

I appreciate that this is a minefield and is very complicated. Any help is appreciated and I am more than happy to answer any questions in order to get a sufficient answer.

Thanks

CLAPTON

who owns the house?
who lives in the house?
from whom is the uncle buying half the house

what do you mean 'my mum has put her name on the house'? who is her, your mum or your aunt

Mrmorden21

Ok - its my mums house... she lives in it with my aunt and my uncle is buying half of the house from my mum. My mums name is on the house. No one elses.

CLAPTON

I am completely confused; your aunt paid the mortgage but her name isn't on the deeds?

Anyway, if your mum owns the whole house and her name is on the deeds and she choose to sell half to your uncle then there is no cgt as it is her principal private residence
if the house is subsequently sold then unless the uncle actually lives there too then there will be a liability for cgt.

Mrmorden21

hey

Yes she did pay it. To be honest, its a very long story and somewhat complicated. Basically, my mums name is on the deeds, she owns the whole house. In that situation, since it is her primary residence, she would not be liable for CGT. Is that Correct? So if my uncle buys it for half - he would pay 65k - my mum is free to do with that cash as she wishes with no tax liable?

Sorry for the confusion

Chris

CLAPTON

your use of language is very very confusing.


yes, if she sell all or part of the house, she will not be liable for any cgt on the sale.

and yes she can do whatever she likes with the money

Mrmorden21

The first post was yes, but I dont see whats confusing about ''Basically, my mums name is on the deeds, she owns the whole house''.

Thank you anyway

CLAPTON

well in one post you say


'So if my uncle buys it for half'

and another you say

'my uncle is buying half of the house from my mum'


but if you are happy then I'm happy

taxing

Hi

I am more worried about the poor aunt here. She has paid the mortgage so has a beneficial claim to a legal share in the property but with no one to fight her corner.

Giving up a half share in her home might not be a great idea for your mum. either, as if the property is held as tenants in common after the sale, your uncle could sell his share in he property on...or he might borrow using the house as security.

Your mum has to be very careful here and I would recommend she speaks with a solicitor before she does anything.

If the aunt is disabled, maybe there are grants available to help with the improvements?

Sorry - just a bit concerned.

Regards.

sleepless_saver

Do your mother and your aunt both live in the house?

Annisele

I think capital gains tax is a complete red herring - the OP has said that OP's mum lives in the house with her sister, so there will be no CGT.

Potentially there might be IHT if the mother doesn't survive 7 years after the gift, but given the value of the house the estate might not be large enough for that.

Like taxing, my concern is more about the aunt than the tax bill. If the aunt paid the entire mortgage, then there's an argument (not necessarily a strong one) that the OP's mother holds the entire house in trust for the aunt, and that any money received from the uncle would belong to the aunt.

I'd also be concerned about what happens if the uncle wants to sell to somebody else.