House Transfer from Parents to Child CGT Questions

heyjoe

Hello All

I hope you can help. We have a situation here where 2 parents transferred the title deeds of their house to their only child/young adult in the early 2000's. They did it as a birthday present. Disclaimer: I've had a read of other posts and can see that it wasn't the best thing for them to do at the time.
Said child/young adult was still living in the property with them at the time, and was over 18.

With the recent passing of one of these parents, a discussion has come up about the tax implications of the decision made in the early 2000's.

We were hoping that some of the knowledgeable people on here would be able to help us out with answers to some questions, as we are having trouble navigating 
what we think may be the tax position when the lone parent does pass on (not that we want them to, but we like to be prepared).

Are we right in thinking that since the title deeds were transferred into the young adults name, inheritance tax isn't something to take into account?
House is worth £180k approx.

We are having great issues understanding the Capital Gains Tax implications of the Title Deed Transfer.  

We've read the CGT section on the .gov website a few times but its not making a lot of sense at the moment, so someone breaking it down for us
would be greatly appreciated. 

I'm not sure if you need more information from us or not, regarding the CGT section, if so, let us know.

Thanks.        

Mojisola

heyjoe said:

We have a situation here where 2 parents transferred the title deeds of their house to their only child/young adult in the early 2000's.
Said child/young adult was still living in the property with them at the time, and was over 18.
Are we right in thinking that since the title deeds were transferred into the young adults name, inheritance tax isn't something to take into account?
House is worth £180k approx.
We are having great issues understanding the Capital Gains Tax implications of the Title Deed Transfer. 

Unless the parents have a huge amount of savings, their estates won't have to pay IHT.

If the child doesn't still live there, there will be Capital Gains Tax to pay when the house is sold.

Keep_pedalling

Is the son still living there? If not when did he move out? CGT is not paid on your main residence so if he has not moved there would be no CGT to pay.

if she ever needs residential do not be surprised if the LA treat the transfer as deliberate deprivation of assets as in truth there is no reasonable reason to do the transfer other than to dodge care costs.

Although her estate would appear to be well below her allowances the house still forms part of his parents estate for IHT purposes as they carried on living there after giving it away.

heyjoe

Thanks for your replies.

The child/now adult doesn't live there anymore, and hasnt since 2003/4. So CGT would be payable, correct?

Thanks for clarifying about the deprivation of assets and the LA, its something we had read about. There's nothing to be done about it now, we believe, we just have to deal with the situation we have, and hope the remaining parent doesn't need LA care.    

Finally, is the 28% rate payable on the whole £180k? Would personal tax allowances have any effect on what is paid, when the time comes?

Once again, thanks for the help.

SeniorSam

Tax would be calculated on the gain between the date it passed to you and the date you sell it. You then have your personal allowance to offset before the tax is payable.

Keep_pedalling

heyjoe said:

Thanks for your replies.

The child/now adult doesn't live there anymore, and hasnt since 2003/4. So CGT would be payable, correct?

Thanks for clarifying about the deprivation of assets and the LA, its something we had read about. There's nothing to be done about it now, we believe, we just have to deal with the situation we have, and hope the remaining parent doesn't need LA care.    

Finally, is the 28% rate payable on the whole £180k? Would personal tax allowances have any effect on what is paid, when the time comes?

Once again, thanks for the help.

CGT is calculated on the gain between the value on date of acquisition and value at the point of sale. There will be a reduction for the short time he lived there as the owner. 

The other down side of this is that if he is currently not a home owner he will have lost his first time buyer status.

Keep_pedalling

Trickmaestro99 said:

We offer IHT consultations and can cover all these questions and advice if that helps. 

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