Selling part share

[Gordon999]

There is no cgt to pay.on the capital gain after sale of your own residence.

IHT charged on a deceased person's estate starts above £325K threshold, and is charged at 40% rate.

The 50% share of residence gifted 5 years ago, if counted as part of your estate above £325K, will be reduced to about 15% tax rate after 5 years and to 0% rate after 7 years.

[Bill31]

Im sure the reservation relies on the person who made the gift.
If we was to sell the property and take our 50/50 share of the sale price would that release the gift with reservation if we then went on to buy our own property

[jpkeates]

The reservation will depend (as far as I can see) on who pays the running costs of the property.
If the running costs are split in line with the ownership, it's one thing, if the property is run as though it was the mother's house with her continuing to pay all the bills is another.

[AndrewDod]

Bill31,

Well if CGT was not payable on the first slice it won't be on the second.

I don't see that you retained a benefit, but I can't find any case law to that effect. But if rent was payable it would have gone in both directions (you would have paid your son half the rent and he would have paid you the same amount).

[Bill31]

Interesting that it may not be a grob as we own it all together. But surely hmrc will view it as i retained a benefit.

Its our only main property i dnt think any cgt will be due. I was asking will cgt be due if i make another gift or sell my share to get my name of deeds?
I ask because of already made 1 gift to make us joint tenants. So would another gift be allowed to get my name off. Is a sale allowed of my share to?

[AndrewDod]

It was a gift with reservation, so, unless you are paying rent, the property is still in your estate for IHT purposes.

Although they were BOTH living there and both owned it -- so the share gifted is probably not a GROB. It would be if only the OP was living there (owning only a portion) and not paying rent.

It depends on the proportion - if the OP owned 1% and paid no rent - I think it would be in GROB territory - if OP owned 50% and lived there with one other person who also owned 50%, and neither paid rent to each other -- not so much GROB I think.

Otherwise agree with advice given.

OP did you fail to pay CGT before???? - that may not be good..

[Bill31]

Ok thanks.
So as i already did a gift of the property a few years back. Do i have to to pay cgt on the rest of the property when i gift it over or sell it to son as cash?

[jpkeates]

If you gift someone a property (or part of one) and carry on living there, the gift has reservations.
So you either need to move out or start paying market rate rent to live there to end that situation.

Any transaction done at an undervalue is treated by HMRC as being at market value, so for SDLT and IHT the property would be seen as transacting at £250k
If your son paid £200 for the other half of the property, the £50,000 is a gift, but, this time, with no reservation.

You could have put the property into a trust rather than transferring half as a gift, but it's too late for that now.

[Bill31]

Grob meaning gift with reservation.

What if the purchase is below market value. The share is worth a market value of 250k but i can only afford to pay 200k. How will hmrc view it?

In another view i already made a gift of the property to him as joint tenant, how is the best way of getting my name of the property with incurring cgt or other taxes and loosing the gift with reservation of my name. We dont own any other properties.

[jpkeates]

I don't know what a grob is in this context.

It was a gift with reservation, so, unless you are paying rent, the property is still in your estate for IHT purposes.

As long as your son doesn't live in the new property, I don't see that POAT would apply, but it's not something I have any experience of, so it's worth checking with a professional.

As long as the purchase is at market value, I don't see any obvious problem other than the seven year issue with the "gift" that already exists.

[Bill31]

5 years ago i gifted part of my property to my son as joint tenants. We lived in the property together. So its possibly a grob.

Now we want to go our separate ways. Could he buy my share out so he owns the whole house. And i use the money to buy elsewhere. Could this introduce a IHT or POAT problem?