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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15916
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If a sister is gifting a house worth £250,000 (no mortgage

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If a sister is gifting a house worth £250,000 (no mortgage outstanding) to her brother.
What are the tax liabilities.


Firstly, the gift is a potentially exempt transfer for Inheritance Tax purposes. So long as the donor (the sister) lived for at least seven years after making the gift, its value would not be included in her estate for Inheritance Tax purposes. If she did die before the seven years were up, then the value of the gift would be included in her estate for IHT purposes even though she did not own it at the time she passed away.

Secondly, the gift would be a disposal for Capital Gains Tax purposes at the full market value. That means the sister will be treated as having sold the property for £250,000 and, depending on whether she lived in it during her ownership, she may have Capital Gains Tax to pay. The gain will be the "disposal proceeds" less the cost of the property and any improvement costs. If the sister inherited the property, its cost for CGT purposes will be the value when she inherited it.

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

Customer: replied 4 years ago.

Inhereitrence tax understood.

CG - still confused.

She has lived in the property, but now wants to move in with her grown up children and GIFT the property to her brother. Is it not the simple fact of just transferring the deeds and of you go.

And no money was exchanged.

This is her Principle place.

If the sister has lived in the property for all the time that she has owned it then there will be no Capital Gains Tax to pay under the principle private residence rules.
Customer: replied 4 years ago.

so therefore are you saying that she can gift her PPR without anyone having to pay tax, brother or sister.

That's correct so long as the property was the sister's main home for all the period that she owned it.
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