CGT on Sale of Gifted Property

Johno96

My Mother-in-Law has transferred the ownership of her only home as a Gift to my Wife and Brother-in-Law. She has lived there since they purchased in the late 1950's. Her husband passed away in 2007. She will continue to live there for as long as she wishes, rent free. The property is currently value at £250,000.
When my Wife and her Brother inherit the property, neither wishes to live there. The plan would be to sell it. Will Capital Gains Tax be payable and to what extent?

Catswhiska

What happens if she needs to pay for care in the future as councils will see this as deprivation of assets.

getmore4less

if she stays in the property it is not a gift, it is a gift with reservation.


What protection is she putting in place to stop you selling it from under her?


There is no house to inherit if they have already been gifted it but it still counts for IHT.

Mojisola

Johno96 wrote: »

My Mother-in-Law has transferred the ownership of her only home as a Gift to my Wife and Brother-in-Law.

This isn't a wise thing to do - likely to cause problems in the future.

Deprivation of assets if she ever needs residential care.

Possible Capital Gains Tax bill.

Family problems over who pays for upkeep and maintenance in the house.

If either your wife or her brother ever need to claim means tested benefits, they won't be entitled because they own the house - that may seem unlikely now but lives can change.

Again, you may think it's unlikely but the share in the house would be a marital asset if either of the owners were to divorce.

Added: and on the really cheerful side - if one of them died and their spouse inherited the share in mother's home, would they (and any future partners) be happy to carry on paying out for the upkeep of the house?

Tom99

Mojisola wrote: »

This isn't a wise thing to do - likely to cause problems in the future.
Deprivation of assets if she ever needs residential care.
Possible Capital Gains Tax bill.
Family problems over who pays for upkeep and maintenance in the house.
If either your wife or her brother ever need to claim means tested benefits, they won't be entitled because they own the house - that may seem unlikely now but lives can change.
Again, you may think it's unlikely but the share in the house would be a marital asset if either of the owners were to divorce.

Plus it stays within MIL's estate for IHT so quite a long list of negatives.

00ec25

Johno96 wrote: »

Will Capital Gains Tax be payable and to what extent?

others have already listed why this is a bad idea for all sorts of reasons, but to answer your tax question
CGT would be due on the gain in value between its market value at the date of the gift and its market value at the date of the sale (ie what it sells for)


as you have not given any values the amount cannot be forecast.


tax rules can also change radically over time so be very careful

Keep_pedalling

If this is your MiLs only major asset she has been very foolish as she has also given away her long term security. Apart from the deprivation of assets issue what happens to her if either of her children run into financially difficulty though illness redundancy or an expensive divorce? What happens to her if either of her children pre decease her?

uknick

Why, oh why, oh why, do people only ask for advice after making the decision?

Johno96

If she needs care, we'll pay. Not an issue.

Johno96

Mojisola wrote: »

This isn't a wise thing to do - likely to cause problems in the future.

Deprivation of assets if she ever needs residential care.

Possible Capital Gains Tax bill.

Family problems over who pays for upkeep and maintenance in the house.

If either your wife or her brother ever need to claim means tested benefits, they won't be entitled because they own the house - that may seem unlikely now but lives can change.

Again, you may think it's unlikely but the share in the house would be a marital asset if either of the owners were to divorce.

Added: and on the really cheerful side - if one of them died and their spouse inherited the share in mother's home, would they (and any future partners) be happy to carry on paying out for the upkeep of the house?

RESIDENTIAL CARE : Not a problem - we'll pay
CAPITAL GAINS TAX : That's the part we want to know about
UPKEEP : My mother-in-law is of independent means and does not need support.
MEANS TESTED BENEFITS : Not likely, we own our homes outright and have healthy pension provisions.

HappyHarry

For the CGT liability answer, see the post by 00ec25 above (post #6).

For all us curious posters, why did your mother-in-law decide to transfer the ownership of her home to her children?