How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask taxadvisor.uk Your Own Question

taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4715
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

, My mother who is 80 transferred her house in to her

Customer Question

Hi,
My mother who is 80 transferred her house in to her 3 sons names 30 years ago , she still lives in the house and has not paid rent while living their and pays all utility bills etc , herself. I left the house 20 years ago and my brothers left 28 , and 30 years ago. The house is worth about 325000 . IF my mother should pass away and we decide to sell the house , how is the capital gain calculated. also is the property still considered as part of her estate due to her still living there and not paying rent , and if so what tax implications would this have . Also can you make any recommendations to reduce the tax burden in the future if we eventually are in the situation were we have to sell the house
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

You state your mother transferred her house to her 3 sons but has continue to live in it rent free.

What is your mother's wealth including this property for IHT purposes?

Many thanks
Customer: replied 1 year ago.

Property 325000

Saving 50000

Total 375000

Expert:  taxadvisor.uk replied 1 year ago.

Andrew, thank you for your prompt reply.

Your mother’s estate would be worth £375,000 in the event of death.

The rules relating to passing on a home as a gift are:

(source: HMRC website on inheritance tax)

If a person passed on their home to their children (or someone else) before they died, it’s treated as a gift and the 7-year rule applies.

But if they continued to live in it rent-free, their estate has to pay Inheritance Tax on the home even if they lived for 7 years after giving it away. This is known as a ‘gift with reservation of benefit’.

It is clear from your statement that your mother has continued to live in the property rent free. Therefore the property would form part of her estate for IHT purposes.

It will pass on to the boys on death

More information on this can be found here

https://www.gov.uk/inheritance-tax/passing-on-home

[q]

IF my mother should pass away and we decide to sell the house , how is the capital gain calculated. also is the property still considered as part of her estate due to her still living there and not paying rent , and if so what tax implications would this have . Also can you make any recommendations to reduce the tax burden in the future if we eventually are in the situation were we have to sell the house

[a]

Capital gains would be calculated based on probate value being the base price and not the original cost when the property was bought or value 30 years ago.

You gain would be the difference between probate value and eventual sale price.

Each one of you would claim gains allowance against your share of the gain and the balance would be taxed at CGT rate of 18%, 28% or a combination of both based on your total income in the year of sale.

If the property was made a main residence by any one of you, that brother would claim private residence relief against the gain.

Otherwise, being a second home, allgain is chargeable to capital gains tax.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert:  taxadvisor.uk replied 1 year ago.

Hello Andrew


I notice you have viewed my response to your question about capital gains tax payable on property transferred to the boys by your mother (JACUSTOMER-2wjnrijs- Last Viewed on 18/03/2015 at 14:57).

Just checking to see if you have any issues relating to your question that I may not have addressed. Please let me know if I can be of further assistance.


If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    6894
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Last | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    6894
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    1772
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    464
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2596
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    268
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions