Transfer of Property and tax involved

1Mani1

Hi
My brother currently has the family home in his name although it really belongs to my mother.
If he wants to transfer the property into the name of two other siblings is all that required an AP1 & TR1 & ID1 form?
What tax would be payable upon such a transfer?
The main aim would be to make the transfer and avoid as much tax as possible.
Thanks in advance
Mani

tlc678910

My (amateur) take on it:
If he lives in the house as his only or main home he would not need to pay tax to gift it (unless possibly inheritance tax if he died within seven years).
If the property is not his home (e. g. rented out) he would need to calculate capital gains tax on the gain in value from when he acquired the property to when he gifts it (apportioned if he is only giving away a % of the house.) e. g. If he is giving away 66% of the property and that 66% ha gone up in value by 50k he can deduct his annual allowance of capital gain (plus any other allowances) and then pay tax on the gain.
Capital gains tax calculators are available online. 

1Mani1

Thanks!
As he doesn't live in the house there is no way of avoiding some CGT then?

Keep_pedalling

Is this some dumb protect my inheritance if my mum needs to go into care type scheme?

Edit - I just had a look at your other thread, and this home would appear  to have become your mother’s sole property when your father died in 1995, but at some point has been transferred into your brother’s name, which has a whole heap of tax issues around it.

This would be classed as a gift with reservation so will not fall out of your mother’s estate 7 years after the transfer unless she is paying your brother full market rent.

It also screws up the ability of her estate to claim the RNRB and the transferable RNRB from her late husband potentially putting an additional £350k into IHT territory, so CGT could be the least of your worries.

1Mani1

Not quite, the property has always been in my brother's name but we were considering transferring it into my mother's name instead so that she could take advantage of RNRB. I was trying to keep the scenario in my other post as simple as possible!
  
The main objective is to ensure that not only my brother is on the deeds to the house whilst avoiding as much tax as possible.

My understanding now is that it will only be beneficial for the house to be transferred to my mother if the RNRB's are greater than the value of the house otherwise there will be IHT payable on the excess value. I believe that my mother will still be entitled to my father's £325k IHT personal allowance? If so, that will cover the rest of her assets so £nil IHT to pay. 

In terms of the transfer of property, my understanding is that if my brother transfers 1/3 of the property to another sibling rather than 2/3 then there will only be 33% payable on any CGT arising rather than 66% if he were transferring to 2 other siblings. Although I guess he can transfer as much as he wants to another sibling? i.e. he can transfer 51% to one other sibling?

Again, sorry for the added levels of complexity!

xylophone

Your mother has never owned  the property  in which she lives? It has always been owned by your brother? 
He does not live in the property?
Your father used none of his NRB?
As of the minute, your mother's personal assets are of a value no greater than £650,000? 

1Mani1

All correct.
Adding the house to her assets may push her over £1m of personal assets.

Keep_pedalling

1Mani1 said:

Not quite, the property has always been in my brother's name but we were considering transferring it into my mother's name instead so that she could take advantage of RNRB. I was trying to keep the scenario in my other post as simple as possible!
  
The main objective is to ensure that not only my brother is on the deeds to the house whilst avoiding as much tax as possible.

My understanding now is that it will only be beneficial for the house to be transferred to my mother if the RNRB's are greater than the value of the house otherwise there will be IHT payable on the excess value. I believe that my mother will still be entitled to my father's £325k IHT personal allowance? If so, that will cover the rest of her assets so £nil IHT to pay. 

In terms of the transfer of property, my understanding is that if my brother transfers 1/3 of the property to another sibling rather than 2/3 then there will only be 33% payable on any CGT arising rather than 66% if he were transferring to 2 other siblings. Although I guess he can transfer as much as he wants to another sibling? i.e. he can transfer 51% to one other sibling?

Again, sorry for the added levels of complexity!

If the value of the house is below the joint RNRB you can only claim the full value of the house so it would be pointless as an exercise in reducing IHT.

Did your brother actually purchase the house, or did our parents buy it in his name? 

1Mani1

It is a family home in all but name which my parents paid for.

But I am thinking the opposite - if the value of the house pushes her over £1m in assets then it isn't worthwhile as IHT will become payable.

xylophone

Your parents paid for the property but it has always been registered in your brother's name? That is to say it was a gift to your brother?
Your parents and then your mother alone have always lived in this property rent free?

1Mani1

Yes.

No, it was never a gift they just couldn't put their name on the house at the time. But perhaps legally it will be deemed as a gift despite it not being the intention??

The whole family lived there until everyone moved out. Now it's just my mother and another sibling (not my brother who "owns" the property on the title deeds).