Capitla Gains tax on a property transferred in 1994/5

Funkerella

HI,
My brother and I jointly own a property that was previously owned by my mother.
She signed the house over to us in 1994/5 with the proviso that she could remain living there as long as she wanted.
My mother came to live with me 18 months ago owing to ill heath.
We recently decide to sell the house and have just accepted an offer.
Are we eligible to pay capital gains tax?

G_M

Funkerella wrote: »

HI,

Are we eligible to pay capital gains tax?

So nice to hear of someone who positively wants the right to contribute to the country's coffers!

G_M

Funkerella wrote: »

HI,
My brother and I jointly own a property that was previously owned by my mother.
She signed the house over to us in 1994/5 with the proviso that she could remain living there as long as she wanted.
My mother came to live with me 18 months ago owing to ill heath.
We recently decide to sell the house and have just accepted an offer.
Are we eligible to pay capital gains tax?

So it was a gift with reservation.


https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg32236



IHTM14590 explains that the special rule for GWRs (IHTM04071) is that you can charge tax on

• the value of the initial lifetime transfer, or
• the value of the transferred asset at the date the reservation ceased (usually the date of death).

00ec25

G-M is having an off day if the post above is supposed to say you won't pay CGT on the full gain


the existence of an interest in possession does not alter the fact you acquired the property in 1994 at its then market value from your mother (a connected person)


your CGT is due on the gain from that value to what you sold it for


the fact your mother moved out 18 months ago is irrelevant


your CGT will be calculated on the basis the gain is split according to the 50/50 split with your brother.
Your mother has caused you to pay tax which you would not have had to face if you had just waited to inherit it when she died, although I grant that does carry the risk that it may have needed to be sold to fund care fees whilst she was still alive so you may not have got an inheritance anyway.

Keep_pedalling

The double whammy is that the property will still form part of her estate for the next 5 1/2 years as far as IHT is concerned and the estate cannot claim the residence nil rate band either.