Capital Gains on gifted property.

Mummy_Bean

Confused.com

My grandmother passed away and left her house to my dad and his two brothers. It was /is my intention to buy the house of them. However due to my employment I am currently having trouble getting a mortgage. This should resolve in the next 3months once contract sorted.

We have discussed the idea that they transfered the house into my name then in 6 months I will remortgage and pay them their money.

What tax implications would there be first on them gifting the property to me (none of them are living in it so tech a second home) then would they have to pay Capital gains again 6months later when I give them £250k in cash??

Could we get around capital gains if we did it as loan -they lend me 250k on. paper to buy it off them which i repay at a later date??

qwert_yuiop

There is no tax liability as long as any inheritance tax has been paid.

booksurr

qwert_yuiop wrote: »

There is no tax liability as long as any inheritance tax has been paid.

on the info provided you cannot possibly say that given the person who is "buying" it is not the named beneficary

OP
did grandmother die within the last 2 years and leave a will?
does either your father or uncle need to receive cash from you or can they simply afford to forgo their inheritance?

if yes and yes then either one of both of then should consider a deed of variation which changes the will from leaving it to your dad and uncle to leaving it direct to you, that way you inherit it straight away and CGT is irrelevant

if on the other hand dad and/or uncle need the money then they will have to inherit it and you will have to buy it from them. CGT will only be relevant if the property gains in value between the date of grandmother's death and the date you buy it. This will be the difference between its probate value and it then market value and is a required calculation because you are "connected" to your father. What you pay then (£250k in cash) is irrelevant for CGT purposes, it is what the property is worth at that point in time that controls the size of the gain from probate value and therefore how much, if any, CGT is payable

it is the date you agree to buy it that counts but a slight further complication is who is the liable person? If the property is still in grandmother's name then it is her estate that will be liable for CGT. If the property is in the name of dad and uncle they will be the liable people

qwert_yuiop

You're right, there's not enough information, but if the house is the only asset, the estate is well below inheritance tax threshold anyway.

Mummy_Bean

Yes I am paying for the house. Ok so the usual capital gains...alas it has increased in value by about 30-40k since Feb when she passed away.

I just wanted to make sure the CGT was just on the increase not on the whole amount as they will be transfering it into my name before they receive the money (a loan doc will be drawn up by a solicitor).

Thanks

qwert_yuiop

Yes it's on the profit minus all the usual allowances.