help - should my parents 'gift' my flat to me?

shivstar

Hi,

my parents own the flat I live in, which they bought in 2003 for around £110k. I've lived here since they bought it, and they've also rented the other rooms in the flat (for which they're doing self-assessment). They are thinking about 'gifting' the flat to me, because they've had enough of running it etc and are also concerned about the security of my financial future as i'm currently earning only a small salary through singing work.
We think the flat is currently valued at around £180k.

We need your advice please? is it sensible to 'gift' the flat to me at all? If they 'gift' it to me, what tax issues will there be? i.e inheritance tax, capital gains tax etc?
I'm unlikely to be able to get a mortgage with my small and irregular earnings and a 'buy-to-let' mortgage is also unlikely as the estate I live on has been earmarked for demolition (although nothing is confirmed yet - this could take 10yrs plus - it's already been going on for 6!).

If anyone has anyone has any advice as to what we could do I'd really appreciate it.
I've been trawling the hmrc website, but just find it all so confusing!

Thanks in advance!

willsonline

There are plenty of website which offer advice on what the tax payable is, and thresholds.

PasturesNew

willsonline wrote: »

There are plenty of website which offer advice on what the tax payable is, and thresholds.

and this is one of them ...

bobby-boy_2

hi Shivstar the following is my opinion for more details post on the tax cutting board;

OK your parents can gift you the flat as long as they own it outright (no mortgage) and as long as they survive 7 years from the date of the gift it will not be counted as part of their estate for inheritence tax.

If they gift it to you there should be no capitols gains tax as they have not made any money in fact they have lost money by giving it to you for free.

like i say post on the cutting tax board as there are lots of people there with better knowledge than me

terryw

bobby-boy wrote: »

hi Shivstar the following is my opinion for more details post on the tax cutting board;

OK your parents can gift you the flat as long as they own it outright (no mortgage) and as long as they survive 7 years from the date of the gift it will not be counted as part of their estate for inheritence tax.

If they gift it to you there should be no capitols gains tax as they have not made any money in fact they have lost money by giving it to you for free.

like i say post on the cutting tax board as there are lots of people there with better knowledge than me

Your parents WILL be liable for Capital Gains Tax. The value at the date of the gift is the current market value regardless of the fact that thee property is being gifted.

terryw

shivstar

Thanks to all the replys. They are very useful... there's such a wealth of knowledge and friendliness on this forum - it's great!

clutton_2

"Your parents WILL be liable for Capital Gains Tax."

how can the parents be liable for CGT - they have made no gain

silvercar

Transactions between related people (business or blood) are counted as if they were at market value to avoid the revenue being deprived of tax due.

firstinflight

If a transaction is less than "arms length" i.e. closer than a normal business relationship, then it is deemed to have been sold for the current market value (i.e. 180,000 in this case) and CGT will be due on this basis. This is an anti-avoidance measure, as otherwise it would be very easy to move assets around and dispose of them with no chargeable gains arising

So your parents would be looking at a chargeable gain of around 80,0000.