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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My stepfather wishes to transfer his share of the house

Customer Question

HELLO! My stepfather wishes to transfer his share of the house I live in to me. We were told that there would be Capital Gains Tax to pay. I do not understand how that can be as there would not be any financial transaction, and he would not be "Gaining" anything.
The other issue I have is regarding Inheritance Tax planning etc.I recently contacted a web site who claim to provide financial advise which looks at reducing the amount of tax one needs to pay etc. Their quote for the cost of this service was very high calculated on a percentage of the overall value of the estate. Is this quite usual ,in terms of this kind of advise even if a went to see a professional "on the high street"?
Thank you for you help
Sophie
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. Can you give me the address of the website you contacted please.
Customer: replied 2 years ago.
justanswer uk.
Customer: replied 2 years ago.
are you there
Expert:  TonyTax replied 2 years ago.
I meant the website which says it fees are based on the value of the estate, not this website.
Customer: replied 2 years ago.
I am so sorry. !! www.thetaxexperts.co.uk
Expert:  TonyTax replied 2 years ago.
Thanks. Leave this with me while I draft my answer. It will take a while.
Expert:  TonyTax replied 2 years ago.
Hi again.
If your stepfather gifts you his share of the property you live in, it will be a disposal for CGT purposes at the open market value as if he had sold it and he may have to pay CGT. Take a look here for more information:
https://www.gov.uk/capital-gains-tax/gifts
How much CGT he would have to pay would depend on the amount of the gain and whether the property was ever his main home and let. Take a look at HS283 herefor more information on CGT and the main residence:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet
I've had a look at the site you contacted but cannot vouch for them I'm afraid. I've never had dealings with them. Some companies do base their fees on the basis that you mentioned but not all by any means. A firm of accountants with the relevant expertise will probably give you a better deal but tax planning can be complex and, therefore, expensive. The best way to find the expertise you need is by recommendation.
I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
Thank you.. The reason I question this is because my mother "gifted " her share to me in 1996 and there was no such issue then. Perhaps the law has changed and that may be the reason. My situation is complex as my mother and step father were never married despite living together for over 50 years before she died in 2013. There is another property which my step father lives in and which he also wants to transfer to me. Anyway I think that this is probably too complex a situation to be explored by this service. What would be helpful is information on the government site that deals with Inheritance tax.
Expert:  TonyTax replied 2 years ago.
It was no different in 1996 but if the property had been your mother's home for the entire period of her part-ownership of it, there would have been no CGT to pay as the main residence exemption would have applied.
I can assure you that I deal with this type of question every day but you can find information on IHT here:
https://www.gov.uk/inheritance-tax/overview
and here:
https://www.gov.uk/topic/personal-tax/inheritance-tax
Customer: replied 2 years ago.
I didn't mean that you wouldn't have the expertise. It's only that I don't want to ask too many questions as my situation is complicated. There is also an issue about the house that my father lives in which was jointly owned by my parents before my mother died. I am not sure whether her share goes directly to me or whether it transfers to my father automatically. We were initially advised that it would transfer to him. Which is fine. However, we are now being advised that this advise was incorrect and that I should apply for a Deed of Variation as my father would want me to have this share as well.
I have lost trust in the advise. I don't know if you have any thoughts on this. Thank you
Expert:  TonyTax replied 2 years ago.
A face to face meeting can be better in some situations.
If the property was owned by your parents as joint tenants as opposed to tenants in common, then when your mother died, her share would have passed automatically to your father. The same would have applied in reverse if your father had died first. If it was held as tenants in common, your mother could have left her share to anybody. Take a look here for more information:
https://www.gov.uk/joint-property-ownership/overview
If your father wants you to have his share of the property without him having the CGT problem, a deed of variation needs to be made within two years of your mother's passing. This may have an effect on any Inheritnace Tax liability. Take a look here for more information:
https://www.gov.uk/alter-a-will-after-a-death
You need to have a solicitor with family tax knowledge look at the whole situation as you clearly haven't been well advised to date.
Customer: replied 2 years ago.
We went to a solicitor that we know and he told us to speak to my father's accountant to clarify issues around CGT. This has now undermined my confidence in the solicitor in giving us advise as to best ways to proceed which could help to reduce our Tax liability. It isn't that we don't want to pay Any tax but clearly there are options that can help to at least reduce the liability. I have a son and wish him to be able to have something to inherit!! I suppose what I would like to know is whether it is a specialist accountant that we need to receive advise from or is it a solicitor. what do you suggest? this is my very last question!! I am sorry for taking up so much of your time.
Expert:  TonyTax replied 2 years ago.
It's no problem I can assure you.
Some solicitors have good tax knowledge, especially around IHT, but if you want definitive advice, see an accountant or tax adviser.
If you could do a deed of variation so that the other half of the house passes to you instead of your father, that would avoid the CGT he may have to pay by gifting it to you himself. Any CGT would be based on the probate value of the 50% share of the house in 2013 when your mother died as compared to its value now.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Unfortunately the family solicitor we saw 3 months after my mother's death told us not to do anything. My mother died in June 2013 so that is not even an option now . It also now undermines the recent advise we were given about this being an option for us Now as they knew that the 2 years have elapsed! Anyway this is a minefield! Thank you for your advise. I presume that all this information is in my email so I can refer to it. Thank you once again for being so patient and helpful Regards Sophie
Customer: replied 2 years ago.
Hello! Since the above I have clarified that the properties are both held as "joint tenants". Therefore my mother who has passed away owned one property with my stepfather on this basis and the property I live in is also held as joint tenancy with hmy stepfather. Does this mean that my mother's share goes to my stepfather "automatically" after my mother passed away? Also what happens with my stepfather's share on my home? Does having a Will make any difference to what happens in this situation?
I understand that it is ok to ask further questions hope that's ok
Expert:  TonyTax replied 2 years ago.
A joint tenants arrangement overrides the will and frankly, if a will contradicts that, it shouldn't or the property should have been changed to a tenants in common arrangement.So, your late mother's share of the property she owned on a JT basis goes to your father.If you own a property as joint tenants with your father, then the same will apply if he pre-deceases you. His share will come to you. If you pre-decease him, your share will go to him.