House transfer

House transfer

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My client and his brother inherited a house from their mother.

It was valued at £140,000 and my client bought out his brother for £75,000.

My client now wishes to transfer the house to his daughter and she will repay him the £75,000 which he borrowed to pay out his brother. The balance of the house will be gifted to her.

What are the tax implications
Geoff Oswald

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By User deleted
29th Apr 2008 17:43

"Cost" to be sorted first
"It was valued"--- but was this a formally agreed Probate Value?
If so, 50% of client's CGT base cost is 70k. If not -- and it could well be that Mother's Estate was under the IHT threshold so that no PV was agreed--- the deemed cost has to be market value (MV) at date of death of mother and the 140k quoted could well be challenged.
The other half ? The transaction was between connected persons so MV is the deemed acquisition price and this may or not be 75k
-- possibly another argument with Valuation Division down the line with the brother at the sharp end.
Still with CGT in mind, the gift will be taken as a sale at MV ( ignoring the daughter's payback ) . Thus, if MV at date of gift was 145k and the other "costs' are accepted there will be no gain . Otherwise , you have a taxable gain , which to the extent it exceeds the annual exemption will be charged at 18%.
With IHT in mind, we are looking at a PET , the measure of which is the MV of the house when transferred less what we can term the
"purchase price" of 75k.
Hope you know a good, tough valuer !


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