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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Issue -tax implications and inheritance tax My mother owns

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Issue -tax implications and inheritance tax
My mother owns a house worth 390K with no mortgage. She intends to sell it and retain 50 percent of the profit and give myself and my sister 25% of the proceeds of the sale. However, I would like to buy the house from her with a buy to let mortgage raised against another property I own and therefore buy my mothers house at a value that would take into account the 25% I would have received if she sold it to strangers. I would not live in the property but would rent it out. My mother would give my sister her 25% share from the money I pay my mother for the house. Would this raise any tax implications for me or my sister now or in the future?
Hi. Regardless of the price you pay, you would be treated as having paid the open market value for the property. However, assuming that your mother has lived in the property for the entire period of her ownership to date, she would not incur a charge to Capital Gains Tax due to the main residence exemption rules as described in HS283. The gift of £97,500 to you (the discount on the market value) and the gift of £97,500 to your sister would be treated as potentially exempt transfers which would fall out of your mother's estate for Inheritance Tax purposes if she lives for seven years after making the gift. Take a look here for information on IHT and who pays it. I hope this helps but let me know if you have any further questions.
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