Is CGT owed?

joshly

In 1999 my retired, widowed mother sold her sole property that she had owned and lived in for 15 years because she did not want to worry about the upkeep and maintenance anymore, she then rented a house.

She then bought a property in June 2000 which cost £60,000 but she never lived in it.
I lived in it from June 2000 but the deeds were in her sole name.

In August 2003 she wrote to the solicitor that dealt with the purchase of the property and asked her to change the deeds to my sole name.

We were not asked the value of the property at the time the deeds were put in my name and we never thought anything about it.

But I have since been wondering if CGT should have been paid by my mother when the deeds were put in my name as the property would have gone up in value in those previous 3 years?

chappers

Not entirely sure but wouldn't have thought so as she was renting her own residence, so this would have been her sole owned residence and as such could actually have been designated as her own primary residence.
Even if she had owned two properties she could have designated your house as her own primary residence.
If god forbid she doesn't make it to August 2010 though there could be some inheritence tax issues, depending on the size of her estate.

noh

chappers wrote: »

Not entirely sure but wouldn't have thought so as she was renting her own residence, so this would have been her sole owned residence and as such could actually have been designated as her own primary residence.
Even if she had owned two properties she could have designated your house as her own primary residence.
If god forbid she doesn't make it to August 2010 though there could be some inheritence tax issues, depending on the size of her estate.

No that's not the case
The house could not have been nominated her primary residence as she never lived in it.
There is therefore a potential CGT liability.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4020890
http://www.hmrc.gov.uk/leaflets/cgtfs1.htm#b10

Nigel

dunstonh

the rented property was her primary residence. The other property is an investment property and potentially subject to CGT.

joshly

So even though my mother gave me the property as a gift for me to live in she might have to pay CGT?

Do you know what the CGT allowances were for a single retired woman in the years 2000, 2001, 2002 and 2003?

I am guessing the property went up by about £40,000 in that time.

I wonder why the solicitor never mentioned CGT to us when transfering the deeds to my name.

dunstonh

So even though my mother gave me the property as a gift for me to live in she might have to pay CGT?

There is no CGT gifting allowance between parent and son. Just spouse.

I wonder why the solicitor never mentioned CGT to us when transfering the deeds to my name.

He is not a tax adviser, accountant or financial adviser.

edit: Noting the difference in the timescales between the purchase and gift being very small, there is likely to be little or no CGT payable.

joshly

I have just found and looked at the HM Land Registry deeds for the above mentioned property from 2000.

In section B: Proprietorship Register.
Title Absolute.
1) It has only my name and the property address.
2) the price paid.
3) About covenants.
4) Restriction; Except under an order of the registrar no disposition by the proprietor of the land is to be registered without the consent of the proprietor of the charge dated 2000 in favour of (mothers name) refered to in the charges register.

Section C:
Charges Register;

1) builders name.
2)Registered charge 2000, to secure the moneys therein mentioned.
3) Proprietor of the charge: Mothers name and address (the rented house).

As I am the Proprietor in the title absolute section would CGT be payble?

chappers

Apologies didn't read properly that she had never lived in the property.

noh

joshly wrote: »

I have just found and looked at the HM Land Registry deeds for the above mentioned property from 2000.

In section B: Proprietorship Register.
Title Absolute.
1) It has only my name and the property address.
2) the price paid.
3) About covenants.
4) Restriction; Except under an order of the registrar no disposition by the proprietor of the land is to be registered without the consent of the proprietor of the charge dated 2000 in favour of (mothers name) refered to in the charges register.

Section C:
Charges Register;

1) builders name.
2)Registered charge 2000, to secure the moneys therein mentioned.
3) Proprietor of the charge: Mothers name and address (the rented house).

As I am the Proprietor in the title absolute section would CGT be payble?

No CGT is due as the property has been yours since it was first purchased.
What happened in 2003? was the charge removed?
Anyway it seems that your mother has effectively made a cash gift to you so there are no CGT implications only the possibility of potential IHT issues.

Nigel

chappers

seems your old Mum was bit more fly than you thought.

joshly

I do appreciate all your help.

Yes in 2003 the "Restriction" (number 4) was removed from part B Proprietorship Register.

So "4) Restriction; Except under an order of the registrar no disposition by the proprietor of the land is to be registered without the consent of the proprietor of the charge dated 2000 in favour of (mothers name) refered to in the charges register."

was removed.

In Part C: The charges register:
"2)Registered charge 2000, to secure the moneys therein mentioned.
3) Proprietor of the charge: Mothers name and address (the rented house)."

were removed from the Land Registry.

So are you saying that because the Title Absolute had only my name in section B in 2000 that my mother is/was not liable for CGT when the Title deeds/land registry were amended to remove the restriction in 2003?