Gifting Property

I am reviewing inheritance planning options with my parents and looking into how best to handle a rental property they own. From what I understand they are able to gift this to me or my brother and this will not be included in their estate as long as one of them lives for another 7 years. Is this correct? If this happens does the value of this property still count against their £325,000 + £175,000 inheritance tax allowance? I've also looked into the tax implications of receiving a property as a gift for my brother and I and believe that there will be no Stamp Duty to pay as there is no mortgage on the property, is this also correct? Where I am less sure is regarding Capital Gains tax, if there is no payment for this property (gifted) is there still a capital gains tax payment to be made?

Hi,

If the property is jointly owned by your parents, they each may have a capital gain tax liability if they gift the property to you and or your siblings. If a gain arises, they each will have 60 days from the completion date to report and pay any Capital Gains Tax.

There is a capital gains calculator at:

Work out tax relief when you sell your home

If you own your home (or a share in it) your tax-free threshold can increase to £500,000 if: you leave it to your children (including adopted, foster or stepchildren) or grandchildren and your estate is worth less than £2 million.

You may wish to speak to inheritance tax regarding any inheritance tax implications

How Inheritance Tax works: thresholds, rules and allowances

Inheritance Tax: general enquiries

You may also want to review the guidance at:

How Inheritance Tax works: thresholds, rules and allowances - Overview

Thank you.

can i gift my property to my Son from overseas? any other points to note re residency Thanks

Hi Colin Walker,
If you are resident in the UK, then you may have UK Capital Gains Tax to pay on gifting the property to your son, no matter where the property is located.
If you are not resident in the UK and the property is located in the UK, then you may have Capital Gains Tax to pay on gifting the property to your son.
Tax when you sell property
Thank you. 
 

Hi, If both mother and daughter are non residents and not citizens of the UK, both reside abroad, but mother owns a flat in the UK which she wants to gift to daughter, will there be any tax owned by either of them after flat transfer? The flat was acquired by mother around 2016 and rented out on permanent basis since around 2019. Thx

Hi,

The gift would be seen as a sale and as not the mother's main residence, then capital gains would be due.

Thank you.

 

Thx for the answer! How long a mother would have to live in the flat in order for it to be considered her main residence and therefore no GC applied?

I want to give one of my property (no mortgage) current value of £150,000 as a gift to my brother and he will be using this property as his main residence, what if he decides to sell the property in 2 years? How much tax he has to pay for selling the property? and what are other tax implications? Thanks

Hi dustpine,

We cannot advise how long, but if the property is your mother's main residience for the entire period of ownership then there would be no tax payable. As you mother is not UK resident while owning this property, that will not be the case.  
The UK property would only become her main residence from the date she moves into the property. This would have to be declared in writing to HMRC.  
Private Residence Relief is the fraction of time the property is the main residence over the period of ownership, usually calculated in months.  
Have a look at the help sheet HS283:

HS283 Private Residence Relief (2024)

Thank you.

Hi Ajay Viki,
If he is using it as his main home, based on current guidance no tax is due.
However, you have Capital Gains  Tax to pay now when you gift the property to him.
Thank you. 

 

Gifting to a Joint Owner (sibling): My brother and I are Joint Owners (no mortgage) of a £380-400K, 1-bed London flat, which we received as a gift from our mother in 2008 (estimated market value then £240K). The flat is currently my main residence, and has been on and off for the last 8 years, and I have been responsible for all outgoings since we acquired the flat. My brother, never having occupied or used the flat for any purpose since owning it, now wishes to gift me the flat (£0 Premium) not least in recognition of me having spent 6+ years caring for my mother during which time I was unable to earn an income and my brother was able to continue with his career. I understand that there would be no Stamp Duty (SDLT) payable, and no Inheritance Tax (unless he died within 7 years of making the gift). What would the CGT liability be? And how would this change if I stopped using the flat as my main residence, and/or sold the flat within 2-3 years of becoming the sole owner? (We are both British, resident in the UK, and UK tax-resident; in our late-50s, no spouse or civil partner, no children)

Hi Jane Bartlett,
Your brother will have CGT to pay as it is still seen as a sale.
This is  based on the difference in value at the time it was gifted and the value now.
He will take 50% of both for his share.
The current price will be based on market value.
We cannot comment on future events as legislation may change.
Thank you. 

Gifting rental property and income to son. I have had a rental property for 5 years that I get the income from (no mortgage). My son has just turned 18 and I want to gift him the property and he will also take over the running of the rental property and keep the income for himself until he is ready to move into it. Will I have to pay CGT as I am gifting him the property and all future income? If he decides not to move into it and sell it in a few years time will he pay CGT from now or from when I bought it 5 years ago? Many Thanks

Hi K J,
Yes. this is seen as a sale of the property and capital gains will be due on the difference in value. your son will also now need to declare the rental income.
Thank you.

If I transfer ownership of my mortgage free property to my only child (18+) will any CGT be payable? Please note the property has been rented out for the last 11 years prior to which it was my main residence, jointly owned with my husband who has since passed away making me the sole owner. If CGT is indeed payable could you explain the parameters that are taken into consideration such that I can then make an informed decision? For example, is the calculation based on when I purchased the property (1980's) or only from the time it has not been my main residence (2013)? Thank you.

Hi,

As it is no longer your main residence then CGT will be due. You can claim Private Residence Relief for the period you lived in it to reduce any charge due. You can see guidance here:

Private Residence Relief (Self Assessment helpsheet HS283)

Thank you.

I appreciate the response. Perhaps you could share the definition of ‘main residence’ as I am not able to locate this on the HMRC pages? For clarity, I do not own any properties other than the one I wish to transfer. Thank you.

Hi
The word residence is not defined in the legislation so it must be given its ordinary meaning. For an individual its ordinary meaning is the dwelling in which that person habitually lives: in other words, his or her home.

Gifting a property to my mother I am looking to gift a property that I bought last year (mortgage free) to my mother. It will be her permanent residence. The property hasn't been let out. I will be moving out into a rental property, at least initially. Will CGT be due in this arrangement? Thanks

Hi Joe,
If the property that is being gifted is not your main residence then yes as it is still seen as a sale , pleas esee guidance at:-
 Capital Gains Tax: what you pay it on, rates and allowances
Thank you.