Capital gains tax when gifting inherited property?

debralee_2

Hi,

My mum owns the property that I live in since she inherited it when my grandfather died 3 years ago. Prior to his death I rented the property from my grandfather but since then my mum has allowed me to live here rent free provided that I paid for any maintenance, she didn't want to become a landlady and she owns her own home. My mum has now decided to gift the property to me but we are unsure whether she would have to pay capital gains tax.

I would be grateful if someone is able to clarify this for me.

Many thanks,
Debra

Pixie5740

It's your mum that would possibly need to pay capital gains tax. How much would be based on the value of the property when your mum inherited it and the market value of the property when she gifts it to you.

debralee_2

Thanks for your reply.

I will have to try and find out the value of the property from 3 years ago, my mum doesn't know. I assume I will have to get an estate agent to value the property now but do they usually charge for that if you're not planning on selling the property?

Also, If the property has gone up in value less than £10,900 do you still have to inform HMRC?

G_M

Gifts to spouses, or charity, are exempt, but I'm afraid gifts to daughter is taxable.

The value when you mum took possession should have been ascertained at the time of your grandfathers death as part of Probate on his Estate, so his Executers or Administrators should have a record.

You can get a couple of estate agents round (free) for a current valuation, and use that, but if HMRC question it they will require a formal Valuation to be paid for.

Or you could pay a surveyor for a Valuation now.

If you normally complete an anuual tax return, then yes, you should record the gain whether it is within the annual alloance or not (but obviously there will be no CGT to pay unless you also have other capital gains).

If you normally do NOT complete an anuual tax return (ie you pay tax via PAYE and have no other income), then you would only need to declare this if CGT is payable.

So if the increase in value is within your annual CGT allowance (and asuming you have no other capital gains this year) AND you don't normally complete a tax return, then no, you don't need to declare it.

debralee_2

Thanks G_M, that's made things a lot clearer for me. I will get an estate agent around for now and keep my fingers crossed that the house hasn't gone up in value that much.