Capital Gains Tax on house

tiptoes27

My mother in law bought her council house over 20 years ago, She was in her early sixties so could not get a mortgage. Her daughter who was in her twenties at the time, working, and living had home bought the house with her on a joint mortgage. The mortgage was paid off a many years ago and the daughter got married and moved into a house she bought with her husband ten years ago. She did still owns half the house but wants to transfer it all back to her mother. She does not feel that morally she owns any of the house and her mother wants to be able to leave the proceeds of the entire house in her will to split equally between all her children. What is the most economical way of transferring the ownership all to her mother? The daughter has never paid any of the mortgage or received any rent from her mother. The arrangement was just done so that the mother could continue to live in the council house where she had lived for many years. Any advice gratefully received.

Debt_Free_Chick

madcatwoman wrote: »

What is the most economical way of transferring the ownership all to her mother?

Wait for more expert answers, but the first thing to spring to mind is for the daughter to transfer a proportion of the equity equal to her annual CGT allowance (about £9,000 at the moment, I think )

The allowance is usually uprated, annually - but ignoring that, if the share is currently £90k it would take about 10 years to transfer the whole lot - so it depends on the numbers involved.

Her share of the equity would need to be recalculated each year - based on the value at that time - less any reliefs.

What do others think?

tiptoes27

Thanks for the reply. The only trouble with that is that her mother is now 83 years old and wants to get her affairs in order so she can sort out her will, so she wants to get it sorted out quickly. The house is currently worth about £300K

Ian_W

Try posting this on the Cutting Tax board which is a little lower down the list.

I'm no expert - and might be barking up the wrong tree - but as the daughter effectively didn't contribute materially to purchasing the home and was only joint owner so that the mortgage could be obtained the mum may be considered the "beneficial owner" for CGT anyway [think that's the right term]. In which case the transfer might not be taxable as the daughter was never the "real" owner and has made no material gain from the property. Factually would need to stand up as transfers between connected persons are likely to be more closely scrutinised by HMRC.

Worth asking the question even if my thoughts are wrong.

tiptoes27

That sounds interesting. The daughter did not contribute to the mortgage, in fact the mortgage was paid off in full after about one year by the mother. They just never got round to changing the ownership over. I suppose they would need to see a solicitor who specalises to sort this out for them.