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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My Father's terrace house has been split into two flats. We

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My Father's terrace house has been split into two flats. We plan on registering this change with land registry. My father wants to transfer ownership of one Flat to myself and the other to my brother. He has owned the house since the 70's and was our family home as kids.
What are the tax implications (for me)of him transferring a flat to myself?


Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

Can you advsie

1) Did your father live in the house up until the change to two flats or when did he ceae to live here as his main residence

2) Does he own any other property

3) Will he live in either of the flats? And will he pay you or your brother rent

4) What is the change of value between the terrace house, and the value of each of the flats



Customer: replied 1 year ago.
Hi,1. My father is from lives abroad full time. This is his london home. He spends no more than three months of the year in the UK.
2. He does not own any other property in the UK.
3. He would not pay rent but would stay with my brother whenever he comes to the UK.
4. I am unsure how to answer this as the change was done in 2002/2003 for the purpose of creating more space. However i believe the price of the house today is between 350k and 500k. individually each flat could sell for 200k to 250k.


Thanks for your responses

Then your father will be liable to capital gains on the transfer of each of the flats to you, his children.

Whether this will be from the date of purcahse of the property originally (if your father is treated as resident for UK tax purposes - as it would appear he may just spend more than 90 days a year in the UK ) or from 06/04/2015 (when the rules on capital gains and non residents changed) will need to be established by HMRC

But either way he will have a capital gain tax bill to pay on each of the flats which is liable on him (not you or your brother)

Do let me know if I can assist further



Customer: replied 1 year ago.
My father is a 75 Retiree and does not have the funds to pay capital gains. I will in effect have to pay it. Is the capital gains a set amount or does it, as I assume, vary upon the value the property has increased?


Thanks for your response

But the liability will be raised on your father , who pays the bills has no bearing -

Its all based on the increase in value less purchase price and refurb to split the two properties, and costs to buy and sell can also be deducted

Then tax reliefs are considered - for any time this wads your fathers main residence and if the flats have been rented out - so whether rental income has been declared to HMRC to allow furtehr tax reliefs.

Plus you need to be aware of Inheritance tax should your father not live more than 7 years from the date of gifting the properties (as they will be considered for UK Inheritance tax and they are situated in the UK)



Customer: replied 1 year ago.
One final Question.
Are there any further implications on myself If I already own a Flat (which I rent out)?


Thanks for your further question -

If you do not plan to live in this flat either then you will have capital gains arising on both properties as and when you dispose of or sell.

If you do live in for the whole period of ownership then your capital gain position is limited to the other property you own and rent out

Let me know if I can assist further, but if you have all that you need then it would be appreciated if you could rate me for the level of service I have provided (or click accept)



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