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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a question regarding my mother in law selling her house

Customer Question

I have a question regarding my mother in law selling her house and wanting to buy my husband a house of gift the money
Submitted: 8 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 8 months ago.
Thank you for your question..Please expand on your question and I will be happy to help you Many thanks
Customer: replied 8 months ago.
So My mother in law owns a farm, she is selling it for around 1.75M. My husband and I have found a property that she is going to buy for us in the region of 975K. What are the tax implications on this? Can she just gift him the property or give him the money? would she need to gift it over several years?
Expert:  taxadvisor.uk replied 8 months ago.
Thank you for your question..Tax implications for your husband -The recipient of the gift receives the money (gift) free of tax as there is no gift tax in the UK.Any gain you make from the sale of property at a future date would be chargeable to CGT unless the property being sold is main residence during the period of ownership. Tax implications for your mother-in-law -This amount (gift) would be a potentially exempt transfer for inheritance tax purposes and the seven year rule would apply. Provided she survives for 7 full years from the date of the gift, the amount would be exempt from her estate for IHT purposes.Whether she gifts this substantial sum in one go or over several years, the above would apply.More information on potentially exempt transfers can be found herehttp://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/ 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.
Customer: replied 8 months ago.
And what tax will she have to pay on the sale of the farm?
Expert:  taxadvisor.uk replied 8 months ago.
Thank you for your reply.Gain from sale of farm would be chargeable to capital gains tax.If she meets the conditions set out for eligibility for entrepreneurs relief, then the gain would be subject to CGT rate of 10% instead of 18% or 28%. Its the gain and not the sale proceeds that would attract CGT.More information on Entrepreneurs relief can be found herehttps://www.gov.uk/entrepreneurs-relief I hope this is helpful and answers your question

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