Probate/Tax Advice on 2nd Property

BigTrev84

My wife's grandparents transferred the deeds of their house over to my mother-in-law approximately 12 years ago shortly before they passed away. This was not put through Probate. Now my mother-in-law has transferred the deeds of the house over to my wife last year as she is ill and now in a care home. The house doesn't have a mortgage. My mother-in-law has another home, so its not trying to avoid nursing care fees. The deeds were put in my wife's maiden name. Our house, which still has a mortgage is under both of our names. I just would like to know the tax implications of of owning this property which we plan to rent out and maybe sell in the future.

Margot123

Are the authorities aware of ALL the property your MIL owns?
Everything needs to be declared even if one of the properties is 'likely' to cover the nursing fees.

Of course, if MIL is self-funding from her pension or whatever then that is a different scenario.

With regard to your question about the tax implications for yourself, you might be better asking on the 'House Buying' forum on MSE: http://forums.moneysavingexpert.com/forumdisplay.php?s=&daysprune=&f=16

getmore4less

BigTrev84 wrote: »

My wife's grandparents transferred the deeds of their house over to my mother-in-law approximately 12 years ago shortly before they passed away.


did the granparents live in the house for all their period of ownership?
How much was this house worth at that time?
how much was the estate worth?
what happened to the rest of the assets.

This was not put through Probate. Now my mother-in-law has transferred the deeds of the house over to my wife last year as she is ill and now in a care home.

Did the MIL ever live in the house for any of the period she owned it?
Was the correct CGT assessment done?


The house doesn't have a mortgage. My mother-in-law has another home, so its not trying to avoid nursing care fees. The deeds were put in my wife's maiden name. Our house, which still has a mortgage is under both of our names. I just would like to know the tax implications of of owning this property which we plan to rent out and maybe sell in the future.

if you plan to rent it out you need to read up on what it takes to run a rental business and the income tax complexities.

Keep_pedalling

There is no emmediate tax issue for you, but house will remain within your MILs estate for 7 years from the date of the transfer so there could be IHT to pay when she dies.

Was the house she transferred her primary residence or her second property. If the latter then she almost certainly has a significant capital gains tax liability to pay.

Yorkshireman99

BigTrev84 wrote: »

My wife's grandparents transferred the deeds of their house over to my mother-in-law approximately 12 years ago shortly before they passed away. This was not put through Probate. Now my mother-in-law has transferred the deeds of the house over to my wife last year as she is ill and now in a care home. The house doesn't have a mortgage. My mother-in-law has another home, so its not trying to avoid nursing care fees. The deeds were put in my wife's maiden name. Our house, which still has a mortgage is under both of our names. I just would like to know the tax implications of of owning this property which we plan to rent out and maybe sell in the future.

Somebody needs to sort the whole mess out as there are all sorts of potential IHT and CGT issues. Why was Probate not obtained? Detailed professional advice is needed to see what can be done to minimise any costs and or penalties. As well as this you need to think very carefully about the tax and legal issues of renting property out. It is full of legal and taxation pitfalls for the unwary. l

silvercar

Generally speaking there is no CGT on death, so disposing of a property that would give rise to a CGT liability in your later years should be carefully considered. Worst case scenario is that the beneficiaries get clobbered for CGT AND the estate suffers inheritance tax.

Keep_pedalling

silvercar wrote: »

Generally speaking there is no CGT on death, so disposing of a property that would give rise to a CGT liability in your later years should be carefully considered. Worst case scenario is that the beneficiaries get clobbered for CGT AND the estate suffers inheritance tax.

But in this case property was transferred before death, so if either of those transfers did not involve a primary residence then GCT is likely to be an issue.

One other thing that occurs to me, is that if the latest transfer did involve the primary residence then the givers estate has been deprived of the primary residence nil rate band that could result in far more IHT being paid when she dies.

The lesson here is never transfer major assets without taking professional advice first.