Is there IHT or CGT?

Bookworm105

Misteek said:

Am I right to understand the relative will only be exempt from CGT if he moves in upon the death of the old owner if he now owns it due to the will.

What if the property is gifted to him whilst the owner is still alive and the old owner moves into the family home as no one lives there. The family home is owned by the relatives family but don't live there.

Lastly is SDLT only applicable if the relative has already a house in his name ? Therefore this becomes the second home. Also would this apply upon death of owner?

@Misteek 
 for there to be no exposure to paying CGT the property must be the only/main residence of its owner.
whether he becomes owner by virtue of inheritance or gift matters not - what does matter is whether, whilst being its owner, does he occupy his property as his only/main residence.

a) owner dies, relative inherits and moves in for first time.
Relative has main residence exemption from the date he moves in. Gap between date of death (ie commencement of ownership) and date moved in would, technically, be exposed to CGT but the value of a gain over what I'll assume would be short period would be tiny and likely be covered by the CGT allowance when he comes to sell it. That gap period will never go away no matter how long he carries on living there as his main home. 

b) property is gifted to him whilst the owner is still alive
CGT liability transfers to relative as the new owner from date of the change of ownership, and as relative does not live there, then relative would have CGT exposure until such time as he takes occupation as his main/only home. From that point on relative will always have a period of ownership which is exposed to CGT no matter how long he carries on living there as his main home.

SDLT
there is no SDLT payable when inheriting a property via a will/death of its owner irrespective of what the person inheriting it may already own

there is no SDLT payable if receiving a property as an outright gift and giving nothing back to the donor in return for that gift
The latter refers to the situation where there is, for example, an outstanding mortgage where relative has transferred that into his own name and therefore has "taken over" the existing mortgage debt from previous owner in return for the gift. If owner cannot clear their own existing mortgage without getting money from the relative that it is not a gift, it is a purchase, possibly at "undervalue". In that case SDLT would be payable by the relative on the amount of cash actually paid by the relative, not the "value" of the property. Higher rate SDLT would also apply given your scenario appears to be that relative already owns the "family home" so would be "purchasing" an additional property.

see link below which explains new mortgage situation to save me writing it out here : 

If you get land or property as a gift or from a will
Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK

Misteek

Bookworm105 said:

Misteek said:

Am I right to understand the relative will only be exempt from CGT if he moves in upon the death of the old owner if he now owns it due to the will.

What if the property is gifted to him whilst the owner is still alive and the old owner moves into the family home as no one lives there. The family home is owned by the relatives family but don't live there.

Lastly is SDLT only applicable if the relative has already a house in his name ? Therefore this becomes the second home. Also would this apply upon death of owner?

@Misteek 
 for there to be no exposure to paying CGT the property must be the only/main residence of its owner.
whether he becomes owner by virtue of inheritance or gift matters not - what does matter is whether, whilst being its owner, does he occupy his property as his only/main residence.

a) owner dies, relative inherits and moves in for first time.
Relative has main residence exemption from the date he moves in. Gap between date of death (ie commencement of ownership) and date moved in would, technically, be exposed to CGT but the value of a gain over what I'll assume would be short period would be tiny and likely be covered by the CGT allowance when he comes to sell it. That gap period will never go away no matter how long he carries on living there as his main home. 

b) property is gifted to him whilst the owner is still alive
CGT liability transfers to relative as the new owner from date of the change of ownership, and as relative does not live there, then relative would have CGT exposure until such time as he takes occupation as his main/only home. From that point on relative will always have a period of ownership which is exposed to CGT no matter how long he carries on living there as his main home.

SDLT
there is no SDLT payable when inheriting a property via a will/death of its owner irrespective of what the person inheriting it may already own

there is no SDLT payable if receiving a property as an outright gift and giving nothing back to the donor in return for that gift
The latter refers to the situation where there is, for example, an outstanding mortgage where relative has transferred that into his own name and therefore has "taken over" the existing mortgage debt from previous owner in return for the gift. If owner cannot clear their own existing mortgage without getting money from the relative that it is not a gift, it is a purchase, possibly at "undervalue". In that case SDLT would be payable by the relative on the amount of cash actually paid by the relative, not the "value" of the property. Higher rate SDLT would also apply given your scenario appears to be that relative already owns the "family home" so would be "purchasing" an additional property.

see link below which explains new mortgage situation to save me writing it out here : 

If you get land or property as a gift or from a will
Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK

Bookworm. Thank you sooooooooo much. I can't thank uou enough for taking out the time to post all this. I really appreciate all your help and time.

People like you are the ones that make positive difference to people's lives.

I hope something positive happens in your life.