Tax Question - House gift from parents
Discussion
My parents are thinking about gifting their last home to my brother and would like to know what the tax implications are. They moved out of their last home (main residence) into their current home approx 1 year ago to be nearer to the grandchildren.
God willing, they should easily live for more than the 7 years required to overcome the IHT hurddle and reduce their/our future IHT burden. As the gift was their main resident only a year ago, I understand that it should be exempt from any capital gain tax. Is this correct?
Finally, will my brother have to pay stamp duty on his gift inorder to put it in his name?
Many thanks in advance!
God willing, they should easily live for more than the 7 years required to overcome the IHT hurddle and reduce their/our future IHT burden. As the gift was their main resident only a year ago, I understand that it should be exempt from any capital gain tax. Is this correct?
Finally, will my brother have to pay stamp duty on his gift inorder to put it in his name?
Many thanks in advance!
Providing they both survive more than the seven years required, the gift should escape Inheritance Tax.
As the house isn't their main residence they could have fallen into a Capital Gains Tax (CGT) trap as the disposal of a non-main residence is a chargeable disposal. If no money changes hands, current market value is substituted for the proceeds so tax might still be payable.
However, even though it is no longer their main residence, CGT allows a further three years of ownership to be treated as a period of main residence, even when it isn't actuallyy the main residence. So there is a good chance thaqt the disposal will also escape CGT. However, they should talk to a CGT/IHT expert before embarking on this course of action. Any fees paid in getting good professional advice should be much less than any unexpected Capital Gains Tax bills.
As the house isn't their main residence they could have fallen into a Capital Gains Tax (CGT) trap as the disposal of a non-main residence is a chargeable disposal. If no money changes hands, current market value is substituted for the proceeds so tax might still be payable.
However, even though it is no longer their main residence, CGT allows a further three years of ownership to be treated as a period of main residence, even when it isn't actuallyy the main residence. So there is a good chance thaqt the disposal will also escape CGT. However, they should talk to a CGT/IHT expert before embarking on this course of action. Any fees paid in getting good professional advice should be much less than any unexpected Capital Gains Tax bills.
junder said:
Could always sell it to him for the grand sum of a £1, then there wouldn't be any tax issues as its been sold to him not gifted.
How naieve can you be?Sorry, Market Value will always be substituted for actual sale price if the actual sale price is blatantly not at the proper commercial rate. The Revenue refer to this type of sale as being as "not at arm's length".
Edited by Eric Mc on Thursday 4th December 09:13
Eric Mc said:
However, even though it is no longer their main residence, CGT allows a further three years of ownership to be treated as a period of main residence, even when it isn't actuallyy the main residence. So there is a good chance thaqt the disposal will also escape CGT. However, they should talk to a CGT/IHT expert before embarking on this course of action. Any fees paid in getting good professional advice should be much less than any unexpected Capital Gains Tax bills.
Thanks Eric for the helpful reply. Any ideas whether stamp duty will have to be paid? ThanksGassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff