Deed of gift - tax implications

[London12]

My mother in law (divorcee) wishes to transfer the ownership of her property to her son (my husband, her only child) and remain living in it. The value of her property is below the IHT limit. She is showing signs of early dementia and whilst we would wish her to remain as independant as possible, it may be that we will need to sell her property at some point in the future to enable us to buy a bigger property for us all to live in. Will we be liable to capital gains tax at the point of sale? Also if she eventually has to go into a home for specialist medical care, within the next seven years, could we be forced to sell our home to realise her share to pay the fees?

[R1Geezer]

If you sell having previoulsly been given the property then it is not your main residence so yes it will be liable for based on market value at the time of the gift so probably no tax to pay. If she has to go into local authority care then the selling of her home may well be seen as cost avoidance and the council may well look to you for payment, you won't be forced to sell but they may well ask for payment. It's a bit of a grey area with no particular time scale but obviously the further down the line the better.

[London12]

Thanks for your response. If the property is worth say �200k now when it is transfered, and then worth �260k when we sell to combine properties, would I be liable for tax on the �60k increase in equity?

[R1Geezer]

Yes, and probably liable for stamp duty on the market value at transfer, not 100% on the rules though, CAB may be worth a call.

[BenArfa]

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