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If property I own is transferred to a sibling at zero cost

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If property I own is transferred to a sibling at zero cost and then later on transferred back to me at zero cost will capital gains tax be based on the amount I originally paid for the flat or the zero value it was transferred back to me at?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. I'm assuming this is not a business property. If you give your sibling a property, you will be treated as having made a disposal for Capital Gains Tax purposes at the open market value as if you had sold it to your sibling and you may have CGT to pay if you make a gain, albeit a paper gain. If your sibling gives the property basck to you, the same will apply in reverse and you will have a cost equal to the market value of the property at the time it is gifted to you. In addition, you will have made a gift for Inheritance Tax purposes which will stay in your estate for sevn years after you have made it. Take a look here for infromation on Inheritance Tax and here for information on taper relief. If your sibling gives the property basck to you, the same will apply in reverse. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
I would like to follow up your answer. I have owned the property for two years. The current open market value is a little higher than the price I paid for it so I will face a minimal CGT if I am regarded as having made a disposal at open market value when I gift it to my brother. He will then own a flat valued at open market value. If in 6 to 12 months time he transfers it back to me as a gift at zero cost he will be regarded as having made a disposal at open market value and so if this more or less the same as the value when I transferred it to him then presumably he will not have made a capital gain and no CGT will be due. Is this correct? If I then let the flat and sell it in 5 or 6 years time will my CGT be based on the difference between the then selling price and the open market value at which is was transferred back to me from my brother?
Expert:  TonyTax replied 1 year ago.
You've got it spot on.
Expert:  TonyTax replied 1 year ago.
I would say that if the property was ever your main home, the potential CGT liability would be reduced.
Customer: replied 1 year ago.
Thanks for your prompt reply. The crucial bit is my tax liability in the future when I eventually sell the flat. The solicitor doing the conveyancing felt that I might be considered to own a flat with an acquisition cost of zero rather than open market value because the flat was gifted to me by my brother at zero consideration. This would have major CGT consequences so I just wanted to check that open market value at the time of transfer would be accepted by HRMC when calculating the gain.
Expert:  TonyTax replied 1 year ago.
Your solicitor is wrong.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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