In this situation mother and father own a property together with their daughter. Mother and father are going to gift their interest in the property to their daughter, who lives in the property. They have also lived in the property for the majority of their ownership, as their only residence, but there is a gap of about 18 months (beyond the 18 month exemption) which is subject to capital gains tax.
We are about to commence getting valuations of the property in order to establish the disposal consideration for the mother and father. My initial thoughts are that a discount for an undivided share might not be appropriate as the effect of the transaction is to re-unite the undivided shares, i.e. the daughter ends up owning the entirety – although of course if they sold their interest to anyone else, it would remain undivided. Likewise, I don’t think there is a discount for it being lived in, as it’s the daughter who lives in it. But I’d welcome any views and experience on this.
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Likewise, I don’t think there is a discount for it being lived in, as it’s the daughter who lives in it.
Under what kind of lease is the daughter occupying the property?
This is a classic case where CGT and IHT valuations for the same transaction can differ. M & F together own 66.67% of the whole, and that is what they are gifting[half each] to the daughter for IHT purposes.
The discount from a pro rata share will be smaller than the discount for CGT for a 33.33% share which each of them owns.
You have not said how daughter acquired her 1/3 share-has she paid her share of outgoings? If not you may have GWR issues with her share if parents gifted it to her some time ago but then continued to live in it.