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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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20 years ago our mother put her house into my and my 2 siblings

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20 years ago our mother put her house into my and my 2 siblings names. All 3 of us are already home owners and do not live in the property. My son is now going to purchase the property. I am unsure whether to gift him my share, or gift him the money to buy my share. Could you advise about the tax implications for me please?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. Let me take a look at this and I'll get back to you in a bit.
Expert:  TonyTax replied 11 months ago.
If you gift your share of the property to your son, you will be treated by HMRC as if you had sold it to him for the open market value. Assuming that the property is worth more now than it was 20 years ago and that it was never your main home during your ownership of it, you will almost certainly have Capital Gains Tax to pay. The gift of your share of the property to your son will also be a potentially exempt transfer for Inheritance Tax purposes, the value of which which will fall out of your estate if you live for seven years aftyer making it. Take a look here for information on IHT and here for information on IHT and taper relief. If you give your son the cash to buy your share of the property, whilst the same IHT situation will apply, there will be no CGT to pay on the cash gift itself. However, you may have CGT to pay as described above if he uses the cash to buy your share of the property.I should just point out that if your mother continued to live in the house after she gave it away, that would be a gift with reservation of benefit which you can read about here.I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
Thanks for your prompt reply. One way or another I will be liable for CGT. This might be a daft question, but when we are classed as 40% or 20% tax payers, do you use your gross income less your tax allowance to get your income. Also, when filling in my tax return this year after the house sale, would my proceeds of the sale be classed as income? Or just be dealt with in the capital gains section?
Expert:  TonyTax replied 11 months ago.
The personal allowance is £11,000. The next £32,000 of your income is taxed at 20%. The balance is taxed at 40% unless your income is over £150,000 when the excess over that figure is taxed at 50%. The gain needs to be reported in the capital gains section of your tax return. The first £11,100 of gains made in 2016/17 will be tax free. The net taxable gain will be added to your income and if that takes you over £43,000, that part of the gain in the 40% tax band will be taxed at 28%. The part of the net taxable gain in the 20% tax band will be taxed at 18%. The CGT can be no more than 28% of the net taxable gain. Take a look here for more information.
Customer: replied 11 months ago.
Thank you, ***** ***** is very helpful.
Expert:  TonyTax replied 11 months ago.
Thanks. Would you mind rating my answer before you leave the site please.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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