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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 11122
Experience:  30 years as a practising solicitor.
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Wife's mother died 20 yrs ago - father remarried and bought

Resolved Question:

Wife's mother died 20 yrs ago - father remarried and bought a second property 8 yrs ago - now valued at £118,000 (owned jointly). 1st. Property "Cornerways" was purchased in 1974 for approx £20,000 and is now valued at £227,000
Cornerways will be inherited by my wife - however wife's father would like to gift Cornerways now as we use the property frequently to help with care as wife's elderly father is fragile and step mother is disabled due to stroke.
The question is really over tax liability. Wife has no income and therefore not a tax payer. Would if be better to inherit Cornerways when the time comes or transfer now as her father wants and be subject to CGT?
Submitted: 2 years ago.
Category: Law
Expert:  JGM replied 2 years ago.
Thank you for your question.
It may make little difference. A disposal now would certainly start the CGT clock ticking early if it isn't going to be your main residence. However, if you wife's father survives seven years from the disposal it wouldn't form part of his estate for IHT purposes.
If you wait for his death, the value of the house would certainly form part of the estate (although you have see today's budget which says that his own home wouldn't be included from 2017 onwards). An increase in capital value for CGT would not start until the date of death.
Happy to discuss further.
I hope this helps.
Please leave a positive response so that I am credited for my time.
Customer: replied 2 years ago.

Thank you,

Just to clarify would the property he is now living only 50% of its value would count towards his estate as it is in joint names up to 2017?

If Cornerways is transferred now would her father have to pay CGT on what he paid for the property and current value. Then if sold after death wife would pay CGT on value at time of sale minus value at death - correct?

Thank you,

Stuart

Expert:  JGM replied 2 years ago.
The second property: that is correct if the property is in joint names.
As regards ***** ***** if it is your father and step mother's main residence they would have no CGT liability. If it is transferred and the transferrees aren't living in it as their main residence they would have a potential CGT liability when they dispose of it based on the value at the date of acquisition.
Customer: replied 2 years ago.

Sorry to be a pain, but transferree will not be living in property so CGT will be based on value at date of transfer to my wife and not when purchased in 1974.

Thank you.

Expert:  JGM replied 2 years ago.
Yes that is correct.
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