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Posted Sun, 11 Feb 2024 10:54:47 GMT by
Hi, Some years ago I assisted with paying off the family mortgage and at the time the deeds were transferred to my name. I am now wishing to gift the property to my parents in order to correctly adjust this to reflect the true owners. My parents do not own another property, and the property is mortgage free. It was my primary residence before I left under 3 years ago. I do not expect to retain any rights regarding the property, and there would be no exchange of funds (I also understand that inheritance tax would apply should I pass away within seven years). Based on the above I am off the understanding that this transaction would not be subject to capital gains, or stamp duty. In addition I should be in a position to claim back the additional stamp duty I had to pay on the property I currently reside in. I mostly read of gifting to a child or partner, so wanted to confirm that there was no additional considerations if this was to parents. Any guidance would be much appreciated.
Posted Wed, 14 Feb 2024 11:58:00 GMT by HMRC Admin 21
Hi Seand DON
A capital gains tax charge may arise on the gifting of a property to a person, who is not your spouse or civil partner.  When your parents gifted the property to you, they may have been liable to pay capital gains tax on the difference between what they purchases the property for and the market value when the disposed of it.  Private residence relief (PRR) may cover the gain, so that no tax is payable.  Help sheet HS283 gives advice on PRR (HS283 Private Residence Relief (2023)).
The same may occur when you gift the property back to your parents.  You may find that you have capital gains tax to pay on the difference between the market value of the property at the time it was gifted to you and the market value of the property when you gift it back to your parents.  PRR may not be applicable in your circumstances.  There is a capital gains calculator at Tax when you sell property, which leads on to reporting and paying capital gains tax within 60 days of completion, where a capital gain arises.
Thank you.

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