ChatterBank0 min ago
liable for capital gains tax?
3 Answers
Hi i have had some very helpful responses in the past on here.
Ok we are in the final days of selling my nans bungalow as she has had to go into a home due to her safety etc.
Regarding the sale 50 percent will go to my nan to pay for her care etc and the other 50 per cent will be split between myself and my mother.
Will any of us be liable for capital gains tax and how much.The bungalow will be sold for about 180k.
any helpful information would be greatly appreciated
Ok we are in the final days of selling my nans bungalow as she has had to go into a home due to her safety etc.
Regarding the sale 50 percent will go to my nan to pay for her care etc and the other 50 per cent will be split between myself and my mother.
Will any of us be liable for capital gains tax and how much.The bungalow will be sold for about 180k.
any helpful information would be greatly appreciated
Answers
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There are 2 separate issues here. Neither of them relate to Capital Gains tax.
1) Inheritance Tax .An individual can give away certain amounts per year - up to �5k - to another individual, free of any clawback for IT. The individual can give away more than this, but it is known as a Potentially Exempt Transfer (PET). This means that the individual must live for at least 7 years from the date of the gift, otherwise there may be a clawback of IT - it depends on the overall value of the estate of the person on death. See more about it here.
http://www.direct.gov.uk/en/MoneyTaxAndBenefit s/Taxes/InheritanceTaxEstatesAndTrusts/DG_1001 0612
2) Payment for care homes
Local authorities that pick up part of all of any bill for someone in care take a dim view of relatives taking the benefit of assets being given away by the person in care. It is very possible that the local authority may question why 50% of your Nan's assets are given away in this manner, if the funds are needed for payment for the care.
1) Inheritance Tax .An individual can give away certain amounts per year - up to �5k - to another individual, free of any clawback for IT. The individual can give away more than this, but it is known as a Potentially Exempt Transfer (PET). This means that the individual must live for at least 7 years from the date of the gift, otherwise there may be a clawback of IT - it depends on the overall value of the estate of the person on death. See more about it here.
http://www.direct.gov.uk/en/MoneyTaxAndBenefit s/Taxes/InheritanceTaxEstatesAndTrusts/DG_1001 0612
2) Payment for care homes
Local authorities that pick up part of all of any bill for someone in care take a dim view of relatives taking the benefit of assets being given away by the person in care. It is very possible that the local authority may question why 50% of your Nan's assets are given away in this manner, if the funds are needed for payment for the care.
cheers buildersmate for the response.As for part 2 we have worked out that with the rest of her savings etc she will be able to live in the home for at least 10 years shes 86 now with no local authority help or aid.
As for part1.A pet was set up as there was no intention of selling the house but now my nan wants the house to be sold so we are carrying out her wishes.I think this is correct.
As for part1.A pet was set up as there was no intention of selling the house but now my nan wants the house to be sold so we are carrying out her wishes.I think this is correct.
Regarding Part 1:
see here from the HMRC on the implications for IHT.
http://www.hmrc.gov.uk/cto/customerguide/page6 .htm#7
It would seem likely that because the value of the total estate may be below the IHT threshold then no IHT would be due, even if your nan does not live to be 93 - the end of the 7 year PET period. It depends what other assets are in the estate.
see here from the HMRC on the implications for IHT.
http://www.hmrc.gov.uk/cto/customerguide/page6 .htm#7
It would seem likely that because the value of the total estate may be below the IHT threshold then no IHT would be due, even if your nan does not live to be 93 - the end of the 7 year PET period. It depends what other assets are in the estate.
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