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gifting a house
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cybernurse wrote: »Thank you to all who have contributed. For the information of gingercordial, it is a true gift with no strings attached and no relationship involved other than a wonderful friendship. No mortgage/debt etc for either of us. We researched the CGT question ourselves and decided he needed to pay to HMRC 18% of the difference between his purchase price (bought in 1993) and the current value of the property. Your comments indicate that he has no CGT to pay yet Xylophone seems to be stating that there IS a CGT liability in our circumstances?
Ok, I had to ask as it is crucial to the answer and it's amazing what people don't think to mention!
If you are NOT connected (no blood relation) then for your friend the normal rules do indeed apply, in that he has disposed of a property for nothing. If truly a gift for nothing then the purchase price was whatever it was in 1993, sale price is nil, result is a capital loss. Therefore he will not pay tax now.
If you had been related (and this is by far the usual scenario for gifts) then s.18 TCGA 1992 would have deemed him to have sold it to you for market value, but if you are not related that can't apply so the disposal proceeds are nil and no gain.
If he dies within 7 years you may have an IHT issue.
Lucky you to have such a generous friend
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