Gifting property. Capital gains tax.

karljt2013

If a modest flat, say worth £60-70000 was gifted from one family member to another (mother to son), under what circumstances would a capital gains tax bill be chargeable?

The person giving the gift is 53 and in reasonable health so I don't think there is a deliberate deprivation of assets issue.

Pixie5740

Is the property being gifted the main home, and has always been the main home, of the person gifting it?

SuzieSue

Why would you think that it wouldn't be chargeable (I am not being sarcastic, just wondering if there is any reason you might think that it wouldn't eg if it was the donor's PPR)? They are connected persons.

AnotherJoe

karljt2013 wrote: »

If a modest flat, say worth £60-70000 was gifted from one family member to another (mother to son), under what circumstances would a capital gains tax bill be chargeable?

If they sold it to Mr.A.Stranger, would CGT be applicable? If so, its applicable, if not, no. Otherwise this would be a trivially easy way to avoid CGT.

G_M

https://www.gov.uk/capital-gains-tax/market-value

1. Private Residence Relief

You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:

• you have one home and you’ve lived in it as your main home for all the time you’ve owned it
• you haven’t let part of it out - this doesn’t include having a single lodger
• you haven’t used part of it for business only
• the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
• you didn’t buy it just to make a gain

You don’t need to do anything. You’ll automatically get a tax relief called Private Residence Relief.
If you don’t meet all these criteria you may have to pay some Capital Gains Tax.

You don’t usually pay tax on gifts to your husband, wife, civil partner or a charity.

Your gain is usually the difference between what you paid for your asset and what you sold it for.
There are some situations where you use the market value instead.
Gfts: Use market value at date of gift.

In some situations you should use the market value of the property when working out your gain. Do this if:

• it was a gift (there are different rules if it was to your spouse, civil partner or a charity)

booksurr

karljt2013 wrote: »

If a modest flat, say worth £60-70000 was gifted from one family member to another (mother to son), under what circumstances would a capital gains tax bill be chargeable?

The person giving the gift is 53 and in reasonable health so I don't think there is a deliberate deprivation of assets issue.

modesty is irrelevant

you are "connected persons" (google it, it's a legal definition)

the donor would be liable for CGT in their own name if the property has not been their main (/only) residence for the entire time they have owned it aka: "Principal Private Residence" or PPR

How much they would have to pay if they are liable is then to a question of the size of the gain (current value - original cost) less any tax relief they can claim.

if you want to know for sure then answer the PPR question and we will then ask the extra questions needed to establish how much your mother would have to pay

G_M

And don't forget the Inheritance Tax implications of the gift.