Selling a gifted house

jojorose

When my husband's mother died (she was very young) she was afraid that her husband would remarry and her sons would not inherit.

The property was duly transferred into the three brothers names in 1995 and my father in law has continued to live there. He has been ill and is now receiving nursing care, funding costs being met by family. This is not about care fee avoidance. It is now obvious that we have a house that is not likely to be required again.

What happens? Is it a capital gains issue after so many years? Does each son take a hit individually or is tax paid at point of sale. All sons were steelworkers - Two sons have taken early retirement and are living on low pensions but they are not of state pension age, the third son is working.

The Estate Agent is coming tomorrow but we have no idea of the process involved relating to the financial aspect of sale.

Hope someone has had a similar experience?

xylophone

Do you mean that the house belonged solely to your mother- in -law and she made a gift of the property before she died?

Or that the property belonged to both parents and they gifted it to the sons before
mother died?

Or the father gifted it after the mother died?

Re Gift with Reservation.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04072

With regard to CGT, since it appears that the brothers have owned a property which was not the PPR for any of them, CGT may be payable by all three on sale?

https://www.gov.uk/capital-gains-tax/overview

Keep_pedalling

The property will need to be professionally valued by RICS surveyer to establish the value at the time of transfer, and if the each share of the property has increased by more than £11,100 (£33,300 in total) then each of them will have CGT to pay.

This is not payed at the point of sale, each brother will need to submit a tax return for the financial year that the property sale falls in, and pay whatever tax falls out of that return.

jojorose

Thank you.

The advice is most helpful. Looks like we will have to get the valuation at point of transfer sorted out asap then.

insured

The more likely thing that could have happened if it was mum who was instigating this, is that the house, or her share of it if she was not sole owner, was left to the sons subject to father being allowed to continue to live there. In which case a life interest trust was created.
When fathers interest came to an end, be that on death, remarriage or some other event e.g. on entering a care home, there would be an uplift to market value at that date and cgt would be payable on the value between that date and date of sale. If the property was sold before the termination of the life interest no cgt would be due as per would be available.
I may be jumping to conclusions about whether this was done, but if it was done by professionals, this almost certainly would have happened.

silvercar

The property was duly transferred into the three brothers names in 1995 and my father in law has continued to live there.

Assuming this was just "done" by notifying Land Registry of the "sale" with no money changing hands, then the base price on which you start calculations will be the value of the property with both parents having the right to remain rent free in the property for as long as they need. This will be less than the market value of the property if it had been empty. There are actuarial tables that can be used to calculate the discount on market value that having aged occupiers brings.

You then have its sale price. Take off the selling costs and you have the gain. So each son is liable to CGT tax on the gain. Each son has a CGT allowance to use if not used elsewhere. If any son lived in the property since 1995 then they some PPR relief and letting relief they could utilise.