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Full details regarding my circumstances are:
After previously living in rented accommodation with my parents and younger brother, we moved in to a property in Colerne, Wiltshire in 1993. We agreed that I would pay 50% of the deposit and the mortgage and my parents would pay the other 50%. The cost of the property was around £55,000. My father did not want to worry about a mortgage as he was 58 at the time and so the mortgage and deeds were only taken out in my name.
My brother did not and has not paid anything towards the mortgage, but still lives with my mother today (both rent free). The property is currently likely to be valued at between £200,000 and £250,000.
In 1997, my mother was able to pay off the remainder of the mortgage from an inheritance and I calculated that this resulted in my parents paying towards two thirds of the cost of the house.
In 2002, I moved and bought a one bedroom property in Basingstoke.
My father died in July 2004 and my mother inherited all of his estate.
In 2006, I sold my one bedroom property and bought a three bedroom property also in Basingstoke with my girlfriend. We married in August 2009.
I have recently made a will for myself and have drafted one for my mother. It is her intention that her estate is split jointly between me and my brother. It is likely that the house would be sold at this point, but I have recently become aware that as things stand I would be liable to capital gains tax on this. The most recent advice I recived was that as I lived there for a while I will be able to reduce this partially by Principal Property Relief.
Please could you advise what options I have to reduce any tax paid on the sale of my mother's house. My date of birth is 26/8/66, my mother's is 22/6/38.
As I understand it, as things stand today I would currently pay 40% capital gains less 9/21 for the years I lived there. For example, £200k x 40% = £80k less 9/21(£34.3k) = £45.7k liable for capital gains. Am I able to transfer the deeds fully or partially to my mother and/or my brother? If so, at what point in the future could it be sold on without it being liable to capital gains tax?
Thanks, ***** ***** like I am getting closer to the answer. I think that the best option is to gift under PET to my mother, but am not sure of the full implications. If I did this and she was to pass away leaving my brother and myself as joint beneficiaries, would I be entitled to the full amount (i.e. 50% of her estate) without having to pay any CGT or IHT (assuming the estate does not exceed the IHT threshold)? I was led to believe that there was a 7 years rule if property was passed over as a gift?
Sorry, I do not understand your answer, please could you explain this in more detail.