Can my mother gift me her share in a property without tax implications?

Question

My mother (70 years old) owns 25% of the property she lives in, with another relative owning the remaining 75%. My mother wants to hand her share over to me now, with an apporoximate vale of £50,000. She would remain living in the property. Are there any tax implications? (the whole estate is under the CGT threshold)

Answer 1

If she continues to live in the property without paying you a "fair market rent" then it is a "Gift with Reservation". In other words she continues to receive a benefit and you do not have the freedom to do as you wish the the house.

The £50,000 would therefore still be subject to Inheritance Tax, should the value of her estate on death exceed the IHT threshold of £285,000 (for 2006/7 tax year).

If, however, she pays you a fair market rent, it would be treated as a Potentially Exempt Transfer. If she survives 7 years, then on her death the £50,000 would be outside Inheritance Tax completely. If she dies within the 7 years, there is a sliding scale of what % would be applicable for IHT.

You will be liable for Capital Gains Tax if/when you sell the property (or your portion of it) since it is not your principal private residence - assuming the value has increased by more than the CGT threshold between the time you acquire it and the time you sell it.

Answer 2

As long as she survives for 7 years after making the gift, it will be exempt for Inheritance tax purposes. if she does not, then it will depend on whether the whole amount of her estate falls under the IHT threshold.

Bear in mind though that you will have a CGT liability when you come to sell the property, as it will not be covered by your main residence exemption. Unless you expect your mum's estate to be over the IHT threshold, then I can't really see an advantage to her doing this.

Answer 3

This does not seem a good idea on the face of it.

As MB says this will still be treated as part of your mother's estate (assuming rent is not paid) although you say this will not be a problem. But . . .

1. When you eventually sell it you will be liable for capital gains tax on the profit made from the date she gave it to you instead of the date of death if she left it to you in her will.

2. Your mother would probably have to pay the newish Pre-Owned Assets Tax which is an additional income tax.

Also if she needed nursing care then the gift could be seen as a deliberate disposal of assets and thus clawed back.

You need to take professional advice if she wishes to go down this route.

Answer 4

when you supply your mom $13,000, the relax $87,000 could circulate in direction of your lifetime exclusion. you would be able to offer away thousands and thousands of greenbacks previously paying present tax decrease than modern regulation. you in simple terms ought to document a modern tax return. That $87,000 could in simple terms decrease the quantity which you will supply tax unfastened over the $13,000 exclusion at yet yet again.