Using a cash gift to buy property. IHT Implications if property value increases.

When using a cash gift, given by a parent before death, to buy property will there be more IHT to pay if the property is at a higher value when the parent passes away?

Hi LittlEbear10 Bee,
If the cash gift was given to you within 7 years of the parent's death, then the cash gift is included in the deceased parent's estate for Inheritance Tax purposes.
There are not tax implications for you, regarding the cash gift.
If you acquire assets with this you may have a Capital Gains Tax liability when you dispose of those assets.
Thank you. 

 

Thank you. So does this mean when selling a property bought with a cash gift, the property will be subject to capital gains tax whenever it’s sold despite the number of years passing? What percentage of the property sale would have to be paid in capital gains tax? Is it anything above the original value of the property, i.e., property is £230k then sells for £270k five years later. How much capital gains tax would be payable? Potentially this cash gift could be taxed around 60% if benefactor dies within 3yrs ( @40%) then capital gains tax at whichever point property is sold? @20%? Is this the same if a property is bought with inheritance money after death?

Is capital gains tax payable on a property, bought with a cash gift, that is a person’s primary residence and only home? Thank you.

Hi LittlEbear10 Bee,
How the property was acquired, is not a factor in calculating capital gains tax on the disposal of a property, so it does not matter whether you paid for it with cash gift of through savings or a mortgage and so on.  Capital gains will look at the acquisition cost (how much you paid for it) and the expenses incurred in acquiring the property (solicitor, estate agent even auctioneers fees etc).  The total of these costs are deducted from the disposal value, as well as the costs incurred disposing of the property.  Whatever remains is either a capital gain or a capital loss.  
Have a look at Helpsheet HS283 (HS283 Private Residence Relief (2023) on guidance for private residence relief. There is also a capital gains calculator at Tax when you sell property, to help you work out if there is a gains and how much it is.  You can save the calculation as a pdf file for your records and click next to register for a capital gains account, so that you can report and pay your capital gain onine, within 60 days of the completion date.
Thank you.