Thank you for your question..
If a close friend wishes to gift you an encumbered property, you would receive the gift free of tax as there is no tax on gifts. There is no upper limit on it.
Your friend has to consider CGT and IHT implications on the gift.
If the property in question is a second home or an investment property, then a transfer would be treated as a disposal and would give rise to a chargeable gain and subject to CGT.
The gift would be treated as a potentially exempt gift and the seven year rule would apply to this gift. If your friend survived for 7 full years from the date of the gift then the gifted amount would be exempt and out of scope for IHT purposes. More information on this can be found here
I hope this is helpful and answers your question.
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