Retired dad selling U.K. property before he passes away

Crazylegz

[FONT=&quot]Hello,[/FONT]

[FONT=&quot]Please can someone help? Apologies if this question has been asked before, I couldn’t find a similar thread. [/FONT]

[FONT=&quot]My dad (aged 75) and his wife (aged 55) own their property 50/50, mortgage free in London. It is joint tenancy. It has been the family home since 1984[/FONT]

[FONT=&quot]Around 10 years ago my dad retired and went to live in Mauritius with his wife, choosing to not sell their house, instead opting to leave it for the three sons to live in rent free. Now they have decided to sell the property and divide the proceeds; a quarter each to the three sons and the last quarter to his wife, who will then gift that money to her son (the youngest son). The agreed sale value of the property is £615K. After estate agents/solicitor’s fees and a major works invoice from the council, we estimate we’ll probably be left with just under £600K. [/FONT]

[FONT=&quot]If we are given this money (roughly £150k each for me & my older brother, £300K for my younger brother) and then my dad passes away, will there be any form of tax to be paid? Please keep in mind he and his wife no longer live in the U.K, they are full time residents/citizens of Mauritius but do still hold British passports. There will probably also be some money left after his death but I would imagine this would go to his wife rather than the three sons. If there are any other essential details I have forgotten to include, please tell me. [/FONT]

[FONT=&quot]Thank you so much for your help. Appreciate any advice.
[/FONT]

booksurr

your father is as you say UK non resident status and has not lived in the property for 10 years. Therefore he is liable to CGT and must report the disposal of it within 30 days of the transaction
https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

he may or may not have CGT to pay - depends on the size of the gain (current value - original cost) given he will have some claim for private residence relief (1984 - 2006 + final 18 months of ownership) but no such claim whilst not living there from 2006 - mid 2014. So in very rough terms of 32 years ownership 73% (23.5/32 years) of the gain is exempt and 27% (8.5/32) of the gain is not exempt. If he does have to pay CGT it might be much beter for you all to wait until he is dead and then inherit it - however.....

for inheritance tax purposes the fact your father is non resident is irrelevant. He remains UK domiciled therefore his whole worldwide estate will be subject to UK IHT

he needs specialist advice as trying to do this on the cheap on a forum could cost him a lot of tax

I am not recommending this website at all - it just happens to be the first google hit:
http://www.expertsforexpats.com/expat-tax/inheritance-tax/

agrinnall

And the other potential fly in the ointment is how the disposal would be treated by the tax authorities in Mauritius, so in addition to the specialist UK advice that booksurr has suggested, he may also want to consult an advisor in Mauritius.

Brighty

booksurr wrote: »

for inheritance tax purposes the fact your father is non resident is irrelevant. He remains UK domiciled therefore his whole worldwide estate will be subject to UK IHT

Not necessarily the case, will need some research. I don't know about Mauritius, but i know that someone from the UK who lives in Germany, if they die in Germany, their entire worldwide estate is subject to German, not UK inheritence tax. I recently discovered this will apply to my brother, which could be painfull

Brighty

Crazylegz

Hi, not sure if it makes any difference but my dad and his wife were both born in Mauritius, not the U.K. They lived in the U.K for a number of decades and then went back. Dad was a tax payer all the way through until retirement.

Wayne_O_Mac

booksurr wrote: »

your father is as you say UK non resident status and has not lived in the property for 10 years. Therefore he is liable to CGT and must report the disposal of it within 30 days of the transaction
https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

he may or may not have CGT to pay - depends on the size of the gain (current value - original cost) given he will have some claim for private residence relief (1984 - 2006 + final 18 months of ownership) but no such claim whilst not living there from 2006 - mid 2014. So in very rough terms of 32 years ownership 73% (23.5/32 years) of the gain is exempt and 27% (8.5/32) of the gain is not exempt. If he does have to pay CGT it might be much beter for you all to wait until he is dead and then inherit it - however.....

Almost certainly no UK CGT, as it's the gain from 6 April 2015 to date of disposal that count in non-resident cases.

xylophone

https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

Cook_County

If as you say your father is not domiciled in the UK and has not been resident in the UK for 17 of the last 20 tax years you will want to start gathering evidence now of his claim to non-UK domicile.

Tuesday_Tenor

Crazylegz wrote: »

My dad (aged 75) and his wife (aged 55) own their property 50/50, mortgage free in London. It is joint tenancy. It has been the family home since 1984

Do check your understanding of the current ownership as your opening post is possibly a bit muddled.

If the couple own the house as JOINT TENANTS then they each own 100% of it, jointly. Neither owns a share of it. When one of them dies the other still owns 100% of it, now as sole owner. The house does NOT form part of the deceased person's estate but becomes solely the other person's 'by survivorship'.

If the couple own the house as TENANTS IN COMMON' then they each own a share of it, usually 50% each. When one of them dies, their 50% share becomes part of their estate, and is passed on according to their will, or if no will, according to the rules of intestacy. It does not automatically become the other person's. The will or rules of intestacy might lead to the other person inheriting that half of the house, or might not.

HTH you get some clarification.