Gifting a portion of a property

Hi, My father recently passed away and my mother is due to inherit the primary residence. My mother, brother and I all live in the same house and are planning to stay in the same house for some time. If my mother decides to gift 25% of the property each to my brother and I straight away, and she remains 50% share holder, is that considered a gift with reservation if everyone continues to stay in the house? Or is the fact that the property remains primary residence to everyone it is therefore deemed a normal gift? If it considered a normal gift, what are the implications under current tax law if my brother or I decide to leave the residence?

Hi,

If your mother gifts a share of the house to you, then she is subject to capital gains rules. If the property was her main residence for the entire period of ownership, then Private Residence Relief will cover any gain.  

When you receive your share of the property and you are resident in it, then Private Residence Relief will apply to you for the period of ownership and the period that it was your main residence. You can see guidance on Private Residence Relief here:

HS283 Private Residence Relief (2024)

Thank you.

To confirm though, if my mother continues to live in the property with her 50% share, would her gift be considered to be without reservation as both my brother and I would be staying with her? I would like clarity on the IHT implications o this situation. Thanks.

Hi,

Please contact the Inheritance Tax team for advice.

Inheritance Tax: general enquiries

Thank you.