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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15659
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Mother transferred her home to 2 sons in 1997, with a deed

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Mother transferred her home to 2 sons in 1997, with a deed of trust allowing her to remain in occupation. Mother now in residential home (dementia) and house now sold realising a gain of approx £92,000. Is this taxable on sons, or does the reseravation of occupation affect this? IHT is not a problem as total estate, even with house proceeds, would be under £300,000.

The reservation of benefit does not affect the gain. In some circumstances where there is a reservation of benefit, the value of the house at death can be charged to Inheritance Tax at the same time as the owners are selling it and paying Capital Gains Tax based on a lower "cost" figure. Since your mother's estate was less than £325,000 that isn't a problem for you.

You and your brother should each report gains based on the value of the property in 1997 when it was gifted to you being your "cost" for CGT purposes.

I hope this helps but let me know if you have any further questions.
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