Selling a Property in Cyprus - Inheritance Tax

Gilko2

Hi,

Hoping someone might be able to offer advice...................

My parents purchased a property (holiday home) in Cyprus some years ago with the title deeds in joint names. 

When my father passed away in his will left his 50% share split between my mother, myself and my brother. 

My mother is currently liaising with a solicitor in Cyprus over probate and at the same time is looking to sell the property.

The solicitor has told her we have several options to consider in order to move forward with the sale and I'm looking for advice as to which of these options would be best from a tax point of view (captial gains or inheritance tax) - 

Option 1 - Myself and my brother relinquish our share of the property to our mother so she owns the property outright. She then sells the property and the proceeds go to her and will form part of her estate. An estate that in her will will be shared equally between my brother and I.

Option 2 - My mother gifts her share equally to myself and my brother so we own an equal 50% share. We then sell the property and the proceeds are shared equally between myself and my brother.

Option 3 - My mother and either my brother or myself relinquish our share so one of us owns the property outright. The property is sold and proceeds split (one of us gifts the other 50% of the proceeds).

Bookworm225

options 2 and 3 are pointless as they immediately trigger CGT payable by the donor based on current market value at date of transfer/gifted ownership change given the property is not subject to main home tax relief 

option 1 has some merit if mother's estate will be within the IHT threshold
what is happening (has happened) to father's share of UK property (ie the marital home and other UK property )

Keep_pedalling

Bookworm225 said:

options 2 and 3 are pointless as they immediately trigger CGT payable by the donor based on current market value at date of transfer/gifted ownership change given the property is not subject to main home tax relief 

option 1 has some merit if mother's estate will be within the IHT threshold
what is happening (has happened) to father's share of UK property (ie the marital home and other UK property )

Even if the OPs mother’s estate is in IHT territory, option one may still be the way to go as it it IHT neutral because her estate will have the full transferable NRB available. 

Gilko2

Bookworm225 said:

options 2 and 3 are pointless as they immediately trigger CGT payable by the donor based on current market value at date of transfer/gifted ownership change given the property is not subject to main home tax relief 

option 1 has some merit if mother's estate will be within the IHT threshold
what is happening (has happened) to father's share of UK property (ie the marital home and other UK property )

Thanks Bookworm. My mother still lives in the UK marital home which she now owns.

Bookworm225

Gilko2 said:

Bookworm225 said:

options 2 and 3 are pointless as they immediately trigger CGT payable by the donor based on current market value at date of transfer/gifted ownership change given the property is not subject to main home tax relief 

option 1 has some merit if mother's estate will be within the IHT threshold
what is happening (has happened) to father's share of UK property (ie the marital home and other UK property )

Thanks Bookworm. My mother still lives in the UK marital home which she now owns.

not really the question asked, but from your answer we will assume father is unfortunately dead and his IHT allowance is available to mother as transferable NRB

Andy_L

Is it not going to be subject to the rules on IHT/GGT in Cyprus instead/as well as the UK just to confuse the options?

Gilko2

Bookworm225 said:

Gilko2 said:

Bookworm225 said:

options 2 and 3 are pointless as they immediately trigger CGT payable by the donor based on current market value at date of transfer/gifted ownership change given the property is not subject to main home tax relief 

option 1 has some merit if mother's estate will be within the IHT threshold
what is happening (has happened) to father's share of UK property (ie the marital home and other UK property )

Thanks Bookworm. My mother still lives in the UK marital home which she now owns.

not really the question asked, but from your answer we will assume father is unfortunately dead and his IHT allowance is available to mother as transferable NRB

Sorry, correct.

pecunianonolet

Cyprus has no inheritance tax but some key details are missing about the exact circumstances so best to make sure you have somebody that understands UK and Cypriot circumstances.

Perhaps this helps: https://philippoulaw.com/articles/inheritance-tax-in-the-uk-vs-cyprus-a-strategic-guide-for-wealth-preservation/ 

Gilko2

pecunianonolet said:

Cyprus has no inheritance tax but some key details are missing about the exact circumstances so best to make sure you have somebody that understands UK and Cypriot circumstances.

Perhaps this helps: https://philippoulaw.com/articles/inheritance-tax-in-the-uk-vs-cyprus-a-strategic-guide-for-wealth-preservation/ 

Thanks pecunianonolet.