Capital Gains and Inheritance Tax on gifted property

Hello, Just wondering if anyone could help me with a capital gains and inheritance tax enquiry. Long story short, my mom is going to transfer ownership of her property to me but she will remain in the property for the foreseeable future (gift with reservation of benefit). The value of the propery is £180K, so am I right in saying I will have no issues with inheritance tax as it’s under the threshold? Now, my capital gains tax query is as follows: Scenario A: My mom does a transfer of ownership of her property to me in 2025. She passes away in 2026. I sell the house in 2030 for a profit. Scenario B: my mom passes away in 2026 and gifts the property to me in her will. I sell the house in 2030 for a profit. I want to keep this as straightforward as possible so there's no other additional value in my mom’s estate and no hidden trusts etc. In these hypotheticals. Am I correct in saying that the capital gains tax are applicable in both scenarios, here? I.E. there's no capital gains tax exemption in scenario B as it was left in a will rather than a transfer of ownership when she was alive? Someone said this is the case but I think they have gotten inheritance tax mixed up with capital gains tax so I just want to be sure. So, just to confirm, from a capital gains tax perspective, is there any difference between us doing a transfer of ownership now while she’s alive as opposed to waiting for her to gift it to me in her will? And would inheritance tax not be applicable here as it’s under the £325K threshold? Any help is appreciated. Thanks

Hi

We cannot comment on scenarios.  If your mum gifts the property to you, she may have capital gains tax to pay, but this may be reduced by private residence relief.  
Your mum's estate may have inheritance tax to pay is she passes away within 7 years of gifting the property to you.  
Have a look a the guidance on inheritance tax at How Inheritance Tax works: thresholds, rules and allowances.  
If you inherit the house through a will, rather than be gifted the property during your mother's lifetime,  You may have capital gains tax to pay on its disposal.  You would need to obtain the market value of the property at the time is gifted to you or obtain the probate value if you inherit it, so that a gain can be calculated from the disposal value.  
There is a calculator at Tax when you sell property, which will also allow you to create a capital gains account, so that you can report and pay any capital gains tax within 60 days of completion.

Thank you

I'm still not clear My situation is that I'm going to gift a house to my daughter that's currently being rented. Ii believe that as long as I don't take any benefit from the property once the ownership is transferred, and l live over seven years, then I don't have to pay cgt. Is this correct?

Hi,
No that is for Inheritance Tax. As you are referring to a 2nd property, CGT will be due as this is seen as a disposal.
Capital Gains Tax: what you pay it on, rates and allowances
Thank you.

Hi, A relative gifts a property 3 years ago. The donor vacates the property and it is sold 1 year ago. The donor now dies. It is part of the donor's estate for IHT purposes, but should the valuation be at the date they die?

Hi,
You will need to contact our Inheritance Tax team for advice.
Inheritance Tax: general enquiries
Thank you.

Hi. My MIL gifted her house in 2012 and lived in the property as if it was her own (no rent paid), she passed in 2024, will there be CGT payable as the gift failed due to no rent being paid? Thank you

Hi AnnaE,
Possibly. If there has been an increase in value from the date she passed until the date the property is sold then there may be tax to pay -
Report and pay your Capital Gains Tax.
Thank you.

Hi, My mother gifted her house to me but remained in it without paying rent. This situation creates a Gift With Reservation of benefit. She moved out of the house into a care home then sadly died within 3 years of doing so. That means the full value of the house needs to be included in the estate. When calculating her allowance should I also use the residence nil rate band, therefore increasing her allowance to £500K, or, does the GROB negate this? Thanks

Hi Gary Howard,
You will need to check with the Inheritance Tax helpline. 
Contact details here: 
Inheritance Tax: general enquiries

 

Hi, I have spoken to the General Enquiries helpdesk as you suggested. They have advised that RNRB is still applicable even though the Gift was with a reservation of benefit. The RNRB is subject to tapering but the calculator they provide allows this to be computed. Thanks, Gary

My wife owns a rental property and intends to gift 90% ownership to our children whilst retaining 10% ownership. Does she pay capital gains tax at 90% of the increased value (less any allowances) or 100%? If the former, how would she reflect this on her cgt submission viz.. does she show the market value less 10%? Many thanks

Hi ,
 

The capital gain would be 90% of the disposal value minus 90% of the allowable costs.  Allowable costs would be the acquisition cost of the asset and the incidental costs of acquisition and disposal.  Please have a look at CG15250 (:  CG15250 - Expenditure: incidental costs of acquisition and disposal   ). Thank you .