CGT on "Gifted" Property

zenith1820

Hi All

My mother has two house, one she is living in and another which she used to rent out but has not done so for the past 2 years due to renovation work. She wishes to give me this house as a gift. (free of charge as I have put alot of time and money into the renovation). I have been told by someone that since the house properties have risen since the house was originally purchased I will be liable to pay a large amount of tax. What can I do to avoid paying the CGT?

Many thanks

Richie(UK)

Hi,

Yes, if the property is not her main residence (and it sounds like it isn't) then CGT will be payable on the gain made. Strictly, any CGT liability that arises will belong to your mother as the house is her asset.

That said, what are the amounts involved? There is an annual exemption of £8,500 to set against any gain that arises. There is also Indexation Allowance (up to April 1998) and Taper Relief to consider.

zenith1820

hi
the property was purchased for £16,000 about 10 years ago and is now worth £100,000. Someone told me that if we can show the council/IR that she has made the second property as her primary residence (bills etc on her name ) for at least 6 months and then transfer the property to me, no CGT will have to be paid. Is that true? Thanks

Richie(UK)

zenith1820 wrote:

hi
the property was purchased for £16,000 about 10 years ago and is now worth £100,000. Someone told me that if we can show the council/IR that she has made the second property as her primary residence (bills etc on her name ) for at least 6 months and then transfer the property to me, no CGT will have to be paid. Is that true? Thanks

A different 'someone' to the first 'someone' I take it

The council don't need to be convinced. It is the Revenue that are important. Did your mother genuinely occupy the house as her main residence for a period of time? If so, then there is scope for at least some reduction in the amount of gain chargeable.

You can get more information here. Note that Letting Relief may also be available.

sneekymum

Her best bet might be to genuinely occupy the house for a while....