Paying tax on selling my dad's house.

[Gizmonster]

Okay so here's the deal - my father recently signed his house over to me.
My question is - when my father passes away, will I be liable to pay tax when I sell the house? Would we have been better leaving the house in his name and he leaving it to me in his will - or would it make no difference either way - would I still have to pay tax when I sell the house. I currently own a house with my partner so my father's house wouldn't be classed as my main house (if that makes any difference).
TIA :)

[bednobs]

you will need to pay captial gains tax if it's not your main residence, when you sell it (assuming it has gained in value. The other consideration might be inheritance tax when your dad dies. If it is within 7 years of giving his house to you, it'll still be liable proportionately for inheritance tax. That however, is paid out of the estate but if he has no assets left, the IHT bill might well be more than the estate

[Gizmonster]

When you say I have to pay tax (assuming it's gained in value) - do you mean I'll pay tax on the increase since my father signed the house over to me ?? So say for example, the house is worth £170k when my dad signs it over to me and when I come to sell it, it's worth £200k - I'll only end up paying CGT on the £30k increase (less my personal allowance).
I've just been looking on the HM Revenue & Customs website and after 7 years it'll be free of Inheritance tax liability as "If you survive for seven years after making a gift to someone, the gift is generally exempt from Inheritance Tax, no matter what the value".
Am I understanding this correctly ??

[bednobs]

yes, that is my understanding

[ubasses]

If you have a spouse it would be worth puttting it in joint names as then you will both have a capital gains allowance to offset. But remember if your father needs to go into a care home and the powers that be deem that he has given away assets to avoid paying for care they can still take it into account

[bednobs]

ubasses makes a good point. there is no time limit for this

[Buenchico]

If your father gave you his house outright (so that he longer lives in it, he doesn't benefit from it and there were no conditions placed upon you when the property was transferred) then if he lives for 7 years from the date of transfer the value of the property will not count towards his estate when it is assessed for (possible) Inheritance Tax purposes.

If your father gave you the house outright (as above) but he does not live for 7 years, then part of the value of the house (based upon a sliding scale) will be considered to be part of his estate for Inheritance Tax purposes.

If your father continues to live in the house (or otherwise retains an interest in it) the property transfer will be considered to be a 'gift with reservation' and the whole of the value of the house will always count towards his estate, for Inheritance Tax purposes, irrespective of how long he lives for. (The only exception would be if he's paying you the current market rent to live there).

It should be remembered that if the value of your father's estate (including the value of the house, or part of it, where relevant as above) comes to less than £325,000 then no Inheritance Tax is payable anyway.

http://www.hmrc.gov.u...-home-to-children.htm

Chris

[Gizmonster]

.... so what about the house that my mum signed over to both me and my sister (my dad's house is just in my name) ??
When my mum split with my step-father, they sold the house, which was in both of their names. When she bought her new house she put it in mine and my sister's names - so this house was never in her name.
Would the powers that be, be able to make us sell the house if my mum had to go into care at some point in the future ??

[ubasses]

Depends on how long ago. If it was bought with her money and they deem that she did it to avoid paying care fees, yes they can. When my Mum went in they asked if she had given any assets away in the last 20 years.

[Buenchico]

If your mother is living in the house which she purchased, then (despite putting it into the names of her children) she retains a 'beneficial interest' in the property. That interest could possibly be taken into account when considering any liability for care home fees:
http://www.direct.gov...CareHomes/DG_10031523

Chris

[Gizmonster]

Thanks for all the replies ..... if my head didn't hurt before, it certainly does now lol =/

[cathfromsaron]

if he is doing this to evade or avoid nursing home fees in the future then beware ... he may be found to have 'wilfully disposed of his assets' and you will be screwed for the bill! check out:

www.sagazone.co.uk/