please help does my 83 year old mum have to pay capital gains?

pennypuppy

Hello,
on the 5th of April mum transferred as a gift a property to my sister. Edit: It was in dads name, dad died in 2015. We got it valued for that date - it was 37,500. (It's derelict and not therefore her primary address which is the house next door to this property). Anyway mum gets her old age pension 750.64 and a private pension of 316.74.
She has no other income. I was just wondering should she pay capital gains? She is sitting really worried thinking about it and thinks she will get a fine.

[Deleted User]

I am slightly shocked that someone advised (presumably) to make this transfer. What was the value at 5th April - more than £49800?

pennypuppy

I made a mistake, the derelict house was just in dads name. Yes it has gone up in value since dad died. Mum is intending to gift her primary residence to me (its in both names) this financial year

[Deleted User]

What is the value of the derelict house?
On the primary residence - what sound reason is there for transferring this house? As it has been her main residence it will be exempt from CGT. However, you will be liable for CGT when you come to sell it on the difference between the value at sale and the value at transfer. If your mum continues to live in the house it will remain as part of her estate despite no longer being in her name. This is known as a gift with reservation of benefit. So the house could attract both CGT AND inheritance tax as a result of the transfer. Can the house not be willed to you instead?

Keep_pedalling

pennypuppy said:

Mum is intending to gift her primary residence to me (its in both names) this financial year

That would be a very stupid thing to do. All it would do is threaten her long term security and it has no advantages as far as IHT is concerned (look up gift with reservation of benefit) and will not avoid residential care costs should it be needed in the future (look up deliberate deprivation of assets). The second point already applies to the property she gifted your sister.

pennypuppy

Oh dear, It could be. The issue is we are knocking both down and rebuilding and much of the rebuild (to first fix) is from money in mums account. Yes she will be living in a granny flat in the property.  TBH I have just struggled out of debt and am on a very low income. I have 2 adult children with real medical challenges that live with me. Therefore a big tax bill is impossible for me - I don't nor won't have it. I worked for years in the family biz for nothing, it was struggling. Thankfully it was sold before dad died and they were ok.

[Deleted User]

pennypuppy said:

Oh dear, It could be. The issue is we are knocking both down and rebuilding and much of the rebuild (to first fix) is from money in mums account. Yes she will be living in a granny flat in the property.  TBH I have just struggled out of debt and am on a very low income. I have 2 adult children with real medical challenges that live with me. Therefore a big tax bill is impossible for me - I don't nor won't have it. I worked for years in the family biz for nothing, it was struggling. Thankfully it was sold before dad died and they were ok.

Relax a little - can you put a value on the derelict property and we will go from there. It is important.

pennypuppy

I already do a lot of mums care and would regardless of all this. She has arthritis in her hands but cognatively grand. The design of her space will include a roof suitable for a hoist etc. 

[Deleted User]

pennypuppy said:

I already do a lot of mums care and would regardless of all this. She has arthritis in her hands but cognatively grand. The design of her space will include a roof suitable for a hoist etc. 

If property is to become your main residence there will be no CGT. We can’t help you on the derelict house position without some idea of its value last month - there are issues with that.

pennypuppy

The current value of the derelict property is probably 50k.

pennypuppy

Why was she advised to get the valuation done for when dad died?