Gifting a house to children - tax implications

Richard2012

Hi there

I was wondering if anyone would be able to help with a small property tax query.

In 2004, my father gifted a house to me at an approximate value of £875,000 according to Zoopla’s historical valuations. He did not live with me in the house, and I was the sole resident. I am now planning to sell this, and it has been valued this week at £1,300,000. Could anyone advise on how to get the best out of this in terms of reducing the payable tax – or any advice on what sort of taxation I am likely to incur would be most appreciated (IHT/CGT?).

We are hoping to invest the money in another, smaller property(s) at some point – so any tips on high interest, low risk accounts to hold the money in the meantime would also be appreciated.

Apologies for all of the questions – just taking baby steps here.

Best regards.

CLAPTON

if you live in the house as your principal residence then there is no tax

ordinary savings a/cs seem appropriate to your needs; use your ISA allowance too

JimmyTheWig

I agree with Clapton. By selling now you are making a profit of £425k. But assuming this is your main residence there is no CGT to pay.
If you own another property as well then this might make things more complicated.

Is your father still alive?
The only issues I can see is if he died and/or needed means-tested benefits (such as care home fees) after gifting you this property.
If he's still alive now then I think you are past the time limit for IHT. I have no idea, however, on what the actual rules are about depravation of capital when it comes to means-testing.

Savings accounts would probably be the best place for your money. Safest to stick to a maximum of £85k per person per institution in case they go belly up.
Look at the savings guide on this site.

Richard2012

Hi both - thank you so much for the very helpful replies.

My father is indeed still alive, so I suppose this helps matters. I have been living across two properties - this one and also with my partner - though only the properly in question is in my name.

My main concern was the seven year time limit after a house has been gifted is obviously long gone, so wondered about the impact of this.

Good call on the savings account. Current ISA is at its limit so I will look to spread across other credible institutions.

Thanks again guys!

JimmyTheWig

Richard2012 wrote: »

My father is indeed still alive

Glad to hear it! Sorry I had to ask. So no IHT will be payable on the house at all.

I have been living across two properties - this one and also with my partner - though only the properly in question is in my name.

This does complicate things. One of the houses will have to be your main residence from a CGT point of view. I don't know how you decide which one or how you declare which one.
Have you sold a house since 2004? Did you pay any CGT on it?
Does anyone know if the OP can claim this house as his primary residence and the other house as his partner's primary residence?

Richard2012

Brilliant on the IHT. Not so good on the CGT front then!

I would say, honestly speaking, that my partner's house is my main residence as I spend very little time at the other property these days. If neighbors were to be consulted, they could testify that the house is often left empty.

I have not sold a house since 2004, or ever in fact!

Thanks again

JimmyTheWig

Richard2012 wrote: »

I would say, honestly speaking, that my partner's house is my main residence

Has this always been the case?
Did you live here for a few years after 2004, for example, before moving in with your partner?

But in general it sounds like you are going to liable for the CGT on the £425k profit.
I don't know how it affects things that you have held the asset for a long time. Does anyone know if the OP will benefit from this? There used to be a taper, didn't there? Can he use previous years' allowances?

Richard2012

Thank you so much, you've been a great help.

Anymore insight into what I'm looking at on the CGT front would be appreciated from anyone who has been in this position or may know.

And no, I have never lived there 'exclusively' I'm afraid.

cv65user

is the property furnished . have you been paying council tax on it . if so , then this can be proof that you allegedly live/occupied the house

Richard2012

I have been paying council tax, yes!

JimmyTheWig

00ec25 wrote: »

If not married then your position is based on a test of the “quality” of your occupation and any claim you make for private residence relief (CGT exemption) will be judged by HMRC

In which case I would expect HMRC to come to the same conclusion as the OP that this is not his primary residence. If it is not something that the OP is allowed to choose then it doesn't sound like there is any doubt.

So, can anyone tell the OP, how much CGT would they pay on a gain of £425k on an asset acquired 8 years ago?