Property inheritance tax and gifting property

Biggie

my father and I own a shared property.

He now wishes me and my brother to have our share of the property.
however I don't wish to have shared ownership with my brother so would rather purchase he's share.

I see 2 options

- Change property deeds as father gifts he's share to us I then purchase my brothers share
- I purchase my fathers share and he gifts us the cash

however i'm not sure about the tax implications CGT tax etc

any advice on good tax advisers happy to pay for the tax planning.

CLAPTON

presumably you and your father each own 50% of the property
and your father is proposing to give you an additional 25% and your brother 25%

do you and / or your father live in the property or have you every lived there?

is there a mortgage on the property?

would you need to get a mortgage to buy your brother out?

Biggie

- Father own 1/3 so we would each receive an additional 16.5 %
- Never lived there
- Yes mortgage for my portion
- I could probably raise the cash to buy outright

Biggie

btw my preference would be to purchase my fathers share and then he can do what ever he pleases with the cash. But I don't want him to be hit by capital gains tax unnecessarily.

purdyoaten

Totally lost here! If your father owns a third and you own a third, who owns the other third as you have stated that you do not wish shared ownership with your brother?

What is the current ownership? What will be the new ownership?

zygurat789

purdyoaten wrote: »

Totally lost here! If your father owns a third and you own a third, who owns the other third as you have stated that you do not wish shared ownership with your brother?

What is the current ownership? What will be the new ownership?

If OP and father own a property and father owns 2/3 then, surely, OP owns 2/3.
It is important to know this.

00ec25

Biggie wrote: »

my father and I own a shared property.

that means you own 50% , father owns 50% and brother owns 0% and the plan is for father to dispose of his 50% which would result in you owning 75% and brother owning 25%

Biggie wrote: »

- Father own 1/3 so we would each receive an additional 16.5 %

that means that you must own 66% whilst father owns 33%
so when father disposes of his 33% you will end up owning 82.5% and brother will own 16.5%

which is it?????

Biggie wrote: »

- Never lived there

who never lived there? you? your father ? your brother? or all 3 of you have never lived there?

You must give complete answers to the questions as this dictates who can claim private residence relief for CGT

You are all "connected persons" (to use the CGT terminology) and therefore your father will be liable for CGT based on his share of the sales price using the open market value of the whole property not the actual amount of money which changes hands between you and father

whether your father actually has to pay any CGT depends on how much relief he can claim


similarly if father gifts his share to you and your brother and you then buy out your brother, your brother would himself then be liable to CGT as well so we need to know what relief he can claim

Biggie wrote: »

- Yes mortgage for my portion
- I could probably raise the cash to buy outright

again be more specific.

We need to know if there is already a mortgage on the property or do you mean that at the moment there is no mortgage at all from anyone but you would need one to be able to buy out your brother?

If there is a mortgage we need to know in whose names it is registered, is it: all 3 of you together, you and father together, or
just one of you (which one of you, father or brother)

having an existing mortgage on the property will mean there are additional procedures you will need to do as part of the disposal of fathers share. We need to know before we can help you further

purdyoaten

zygurat789 wrote: »

If OP and father own a property and father owns 2/3 then, surely, OP owns 2/3.
It is important to know this.

That is the most likely scenario. However the op states:

Father own 1/3 so we would each receive an additional 16.5 %

Needs clarification as that would suggest that the property could be 1/3 each already. But op states also that he does not wish to share ownership with brother.....

CLAPTON

your father will be liable to cgt whether he sells his share or gives his share away or disposes of it in any way.

as there will be a change in ownership you will need your current mortgage lender to agree

Biggie

sorry if it's not clear hopefully to clarify

Currently: I owe 2/3 father owes 1/3
He will gift he's 1/3 between me and my brother (either as cash by selling or as property gift)

so effectively I will end up with 82.5% and brother with 16.5%

The property has always been rented since day 1 and the mortgage at the moment though I'm the sole granter it's between me and my father.

CLAPTON

Biggie wrote: »

sorry if it's not clear hopefully to clarify

Currently: I owe 2/3 father owes 1/3
He will sell or gift he's 1/3 between me and my brother

so effectively I will end up with 82.5% and brother with 16.5%

The property has always been rented since day 1 and the mortgage at the moment though I'm the sole granter it's between me and my father.

your father will be liable for cgt on his share however he disposes of the property

who declares the rent to HMRC?