Taxes on gifted 2nd property

james_37

I own a property with a mortgage with my partner.

I'm very fortunate that my mum wishes to gift me her quarter share of a property she owns with siblings (this was inherited from her parents 50+ years ago so unsure of original value and capital gains implications). This share is probably worth around £100k but the property has yet to be valued. It is a second property for her. The property is mortgage free.

What will the tax implications be if I am gifted this 25% share? Am I right in thinking stamp duty won't apply? Capital gains?

Many thanks

Thrugelmir

For your mother. There'll be CGT implications on disposal. After 50 years the gain could be sizable.

davidmcn

No stamp duty on gifts. Yes, you'd become potentially liable for CGT for your period of ownership. Do you want to own a quarter of this property along with your uncles/aunts (or whoever they pass their shares to)? Is it let out? Do you understand landlord responsibilities/liabilities?

james_37

davidmcn wrote: »

No stamp duty on gifts. Yes, you'd become potentially liable for CGT for your period of ownership. Do you want to own a quarter of this property along with your uncles/aunts (or whoever they pass their shares to)? Is it let out? Do you understand landlord responsibilities/liabilities?

No it's not and never has been let out - just enjoyed by the family as a holiday getaway.

When would CGT be due, by who, and how would it be calculated?

Thanks

phillw

Your mum has an annual £11,100 CGT allowance. Maybe she could give it to you a bit each year?

Why is she gifting it to you? Is it to avoid inheritance tax? Or care home fees?
What are you going to do with the share of the property?

There may be more effective ways to deal with it. It probably should have been put in a trust.

james_37 wrote: »

When would CGT be due, by who, and how would it be calculated?

Your mum should pay it when it's gifted. It's supposed to be based on market value.

james_37

phillw wrote: »

Your mum has an annual £11,100 CGT allowance. Maybe she could give it to you a bit each year?

Why is she gifting it to you? Is it to avoid inheritance tax? Or care home fees?
What are you going to do with the share of the property?

There may be more effective ways to deal with it.

I have visited the property pretty much every year of my life so would continue to do this - it holds great sentimental value. She plans to gift it to reduce inheritance tax if this is viable (and also I would take on ongoing bills and maintenance costs).

Partial transfer each year could be feasible. I wondered how the CGT is worked out in this instance?

james_37

phillw wrote: »

Your mum should pay it when it's gifted. It's supposed to be based on market value.

What's this on the GOV website about properties bought before 1982 and calculating it on the value on that date? Is this applicable? Thanks for your time.

james_37

So from my understanding there is no stamp duty to pay but my mum would be liable to pay CGT on the current market value (which would presumably be taken from a valuation from an estate agent?) and would also relate to her income. Is it as simple as that even though the house was inherited 50+ years ago? Is it the market value minus the original purchase price (which I don't know how to find)?

Apologies for the bump but I know there are experts here who might have something more to say on the matter.

Many thanks

Slithery

james_37 wrote: »

So from my understanding there is no stamp duty to pay but my mum would be liable to pay CGT on the current market value (which would presumably be taken from a valuation from an estate agent?) and would also relate to her income. Is it as simple as that even though the house was inherited 50+ years ago? Is it the market value minus the original purchase price (which I don't know how to find)?

To cover herself as much as possible from the taxman both valuations should be carried out by a RICS qualified surveyor, you will be able to get both the current and historical valuation from the same survey.

getmore4less

There are also potential issues if she still benefits from its use as a holiday home.

Thrugelmir

Slithery wrote: »

To cover herself as much as possible from the taxman both valuations should be carried out by a RICS qualified surveyor, you will be able to get both the current and historical valuation from the same survey.

HMRC are far less likely to contest a proper valuation substantiated by a full report.