Capital Gains Tax on a house

NXEC2010

My parents signed the house over to me 30 years ago.  

Whilst they're still alive at the moment I'm considering the implications of Capital Gains Tax.

I know that the limit for this year is £3000 but how does this work.

Lets assume their house was worth £100000 when they gave it to me 30 years ago and it's now worth £300000 - an increase of £200000.

Do I pay Capital Gains Tax on the £197000 (£200000 gain less the £3000 allowance)  if they die this year ? Or do I get the allowance from 1995 (lets say £1000) plus the allowance from 1996 (another £1000) plus the allowance from 1997 etc

Lastly - how do I calculate how much a house was worth in 1995 to work out any potential CGT ?

Keep_pedalling

You don’t pay CGT on their deaths you pay it on the sale of the house. So it would be payable if for instance they wanted sell to downsize and you sold it to accommodate that need. 

This was a pretty silly thing for them to do, there would be no CGT if they had not done this and they have significantly reduced their IHT exemptions because their estates can no longer claim the residential NRB, in addition to this the house has never fallen out of their estates for IHT purposes because this is considered a gift with reservation of benefit so if the value of the house pushes their net worth above £650k IHT is going to be an issue. 

Isthisforreal99

Surely professional advice was taken and you will have the market value......or was it just a silly idea put into practice.

NorthYorkie

Are you sure that you are really the beneficial owner of the property? Just because it may be registered at the Land Registry in your name, it does not automatically mean that you have beneficial ownership. You might be acting as a bare trustee for your parents.
What was the motive behind the transfer?

poseidon1

NXEC2010 said:

My parents signed the house over to me 30 years ago.  

Whilst they're still alive at the moment I'm considering the implications of Capital Gains Tax.

I know that the limit for this year is £3000 but how does this work.

Lets assume their house was worth £100000 when they gave it to me 30 years ago and it's now worth £300000 - an increase of £200000.

Do I pay Capital Gains Tax on the £197000 (£200000 gain less the £3000 allowance)  if they die this year ? Or do I get the allowance from 1995 (lets say £1000) plus the allowance from 1996 (another £1000) plus the allowance from 1997 etc

Lastly - how do I calculate how much a house was worth in 1995 to work out any potential CGT ?

Not going to comment on CGT.

However I note from a previous post you estimate your parent's estate at £200,000  and I assume this does not include the  current value of their house you apparently own .

I would observe  ( if you were unaware) that since your parents are still living in the home many years after the ill advised gift to you, it remains part of their estate for IHT purposes as indicated by Keep_pedalling.

IHT would only be an issue if the house plus their other assets exceed £650k.  Worth pointing out to you and any others whose parents may have made similar ill considered gifts of their homes, that combined £350k of residence nil rate bands has been lost to their estate, despite the deemed inclusion of the house on death for IHT purposes.

If all that were not bad enough, any purchase of your own home in future will attract 2nd property stamp duty surcharges. Difficult to imagine a worse combination of adverse tax outcomes stemming from the 30 year old gift.