Gifting second property to child vs. gifting money - most sensible option?

Opcraft

I'm wondering what is the best option for my mother who has retired abroad and owns two properties in Scotland.

1. Property A was her primary residence for 18 years and was rented out for 2 years. It's value is about £430k. There is £20k left on the mortgage. 
2. Property B was her primary residence for 4 years, and for the other 24 years it was rented out. It's value is £450k. The mortgage has been paid off. I'm currently staying here rent free, for just bills until I get a better job (am on low wage).  

She currently rents an apartment abroad but plans to buy a property there in the near future and so property A is currently on the market. 

She wants to transfer property B to me, her only son (I do not own any property myself). Her reasons are: a) for me to have a place to live in, or sell, as I see fit, b) so she doesn't have to deal with being a landlord any more, c) to mitigate inheritance tax. 

I'm worried about this plan because:

• Transferring a second property to a close family member incurs capital gains tax. According to the HMRC calculator this would be about £50-60k for property B. This would have to be paid out of the proceeds of the sale of property A, reducing the amount she has left over to buy a property abroad. She'd have perhaps £330k left over, which is enough for a small flat in France, but...  
• She has extra expenses due to various health issues and only has a small pension. Due to residency issues, she doesn't have state healthcare provision where she lives, so she has to go private for this. Therefore some of the proceeds of the sale of A will need to be kept aside for her ongoing healthcare needs. 

I'm now thinking that it would be better for her to:

• Sell property A as planned, so as to have some money as a backup (her pension is not great and she's currently worried about money).
• Don't transfer property A to me. Instead, either rent it out, or just sell it. If sold, the CGT amount would be roughly the same as transferring anyway. 
  
• Give me some of the proceeds of the sale of A (or instead, if she wishes. Even though I earn little, I'd prefer her to use it to enjoy her retirement. I'm fine renting. 
• This solves her inheritance tax worry: If she sells both properties and buys a larger place abroad, consolidating the capital into a single primary residence, which then comes under the £500k IHT tax threshold (rather than £325k). Any excess over that she just spends on enjoying her life, the monetary gift to me if she wishes.  

What do you think? 

Brie

I think there would be CGT on both properties - whether sold or gifted.  I may be wrong so best to check what others say.

Of more concern is her ongoing health issues.  If she begins to run out of money and her health goes down hill is it possible she might want to return to the UK?  If so she may be considered to have deprived herself of assets if she has given you a property and you might find yourself with a bill for her care or being made homeless with the council claiming the property to sell to pay her bills.  At least that's what I would expect in England.  Whether Scotland would do the same I'm not sure.  

elsien

This. It’s not unusual for people who have retired abroad as their health declines and friends pass on or move away to decide to return back to the UK to be closer to family.

I think in part that depends how well they have integrated into the local community, but on the grounds of “never say never “ if she thinks she might need that money in the future it’s best to not give it away.  

Keep_pedalling

Brie said:

I think there would be CGT on both properties - whether sold or gifted.  I may be wrong so best to check what others say.

Of more concern is her ongoing health issues.  If she begins to run out of money and her health goes down hill is it possible she might want to return to the UK?  If so she may be considered to have deprived herself of assets if she has given you a property and you might find yourself with a bill for her care or being made homeless with the council claiming the property to sell to pay her bills.  At least that's what I would expect in England.  Whether Scotland would do the same I'm not sure.  

There is unlikely to be much of a VGT liability on property A as primary residence relief covers most if not all of it. The CGT liability on property B however is going to be significant.

Savvy_Sue

Another question relates to where she is now living (and plans to buy property): what does their legal system do about inheritance / tax etc. 

Probably passing her estate overseas to you would be unproblematic (there are some countries where you can't disinherit anyone, but if you're the only son then that's not an issue if mum wants you to have the lot ...) but she needs to know what happens to her estate 'abroad', and whether she needs separate wills to cover UK assets and foreign ones. 

thegreenone

Transfer property B to you.  Sell property A and put the money into the best interest rate account she can find (possibly giving a monthly interest payment) and carrying on renting.  

Don't buy abroad as this will tie up far too much money if she needs it for healthcare, a return to the UK and when she passes it will be an absolute PITA for you to deal with.