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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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We are looking into the options of my mother gifting us

Customer Question

Hi we are looking into the options of my mother gifting us part of the land by her house which currently forms part of her principal private residence. The land does not have planning permission as of yet, but has been deemed to fall into the SAMDEV development plan which means it should not have a problem getting planning. We are exploring the option of there being 4 potential plots, one of which we will keep and build our own house - we do not own our own property currently - have not done so for 7 years - then the other three we would sell to fund our build - I am trying to undertand the tax implications we may be subject to and what can be done to ensure we do this with correct timings so the tax implications are kept to a minimum if possible. Any assistance would be appreciated as its a minefield to understand ! thanks
Submitted: 8 months ago.
Category: Tax
Expert:  taxadvisor.uk replied 8 months ago.
Thank you for your question..You say the land is an integral part of the property.Is the total area including garden and grounds less than half a hectare (which is a little over 1 acre)? Many thanks
Customer: replied 8 months ago.
yes it is - it has been measured by an estate agent
Expert:  taxadvisor.uk replied 8 months ago.
Thank you for your reply. Tax implications – motherCGT – as she would be disposing of land that in an integral part of the area covered as her private residence, any deemed gain on gifting that land would be covered by private residence relief and no CGT payable. For CGT purposes, gift would be valued at market value of that landand this would be your cost price for future transactions. IHT – this gift would be regarded as a potentially exempt transfer for inheritance tax purposes and the seven year rule would apply. If she survives for 7 full years from the date of the gift then the gifted amountwould be exempt from her wealth for IHT purposes. More information on gifts and PET can be found here..http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/ Tax implications – youThe recipient of a gift receives it free of tax. There is no tax payable on gifts in the UK.If you are to sell some land to fund the construction of your property then any gain made on sale of land would be chargeable to CGT. If you were to construct the house and fund it otherwise and were to sell part of your garden at a later date then the gain would be covered by private residence relief. Something you may wish to consider. I hope this ishelpful and answers your question.If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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