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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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I inherited a property from my uncle last year, spent money

Resolved Question:

I inherited a property from my uncle last year, spent money on improving it and are renting it out. I wish to give the property to my son who had his incapacity benefit stopped a year ago. As he is not able to go out of the house I want to transfer to ownership to him to allow him some form of income. Do either of us have to pay any form of tax on the transfer. I am aware that my son will pay income tax and N.I. dependant of the amount of rent paid.
Submitted: 3 years ago.
Category: Law
Expert:  UKSolicitorJA replied 3 years ago.
Hello,

There may be inheritance tax and capital gains tax implications here.

If this property is not your main home and the property has increased in value during the time you inherited it and the time you give it away to your son, you will have to pay capital gains tax on the increase in value.

Depending on the size of your estate and how long you live after you have given the property away, there may also be inheritance tax implications e.g. if you live for at least 7 years after you give it away, there will be no inheritance tax to pay.

See this HMRC guide on the tax implications:

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm#1

All the best
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Customer: replied 3 years ago.

The property was value at 180K and is now worth around 235K due to total renovation. Therefore the difference in value is around the 55K.


I am working with an annual income of around 33K can you advise how much Capital Gain Tax I would pay.


 


Thank you.

Expert:  UKSolicitorJA replied 3 years ago.
It is approximately 11,503. You are allowed to deduct the renovation costs from the gain in value (as you have not indicated what these are, the calculation I have given is based on 0 renovation cost).

You may use this calculator: http://www.invidion.co.uk/capital_gains_tax_calculator.php

All the best