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property gift?
my childhood friend wants to give me her home - she has multiple sclerosis and is not in good health... Her family are not really involved...She trust me implicitely to look out for her..Which i always will...
What are the implications, would it be better for her to gift her home to me or for me to pay a low ball market price..
What - if any tax implications would there be?
She paid 120,000 in 1993 for this property...
What are the implications, would it be better for her to gift her home to me or for me to pay a low ball market price..
What - if any tax implications would there be?
She paid 120,000 in 1993 for this property...
Answers
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If tax is the only concern then, if her estate would total less than �325k, there are no issues at all. If it would total more than that then the gift would become a "potentially exempt transfer" for inheritance tax purposes and, if your friend lives for another 7 years there's still no tax issue. If she dies within that time there would be tax to pay on a sliding scale but the amount would depend on the size of the estate.
The cost and purchase date is irrelevant as it's been a residential home. Cost and purchase date would only be relevant if a Capital Gains Tax calculation was necessary. It isn't.
if you pay a market price for the property then there are absolutely no tax considerations but obviously your friend will then have the money in her estate which just means it would have to be disposed of later. If what you are saying is she want you to have that eventually then there's no point in paying for the house at all. She may as well give you the house sooner rather than later as have you pay it and get the money back down the line. Again though, if the total estate is under �325k it wouldn't make any odds.
Of far greater relevance may well be that she has disposed of capital rather than have the local authority do so and use the funds for her residential care if she eventually needs it. If what you are saying is that will never happen then it has no relevance though.
The cost and purchase date is irrelevant as it's been a residential home. Cost and purchase date would only be relevant if a Capital Gains Tax calculation was necessary. It isn't.
if you pay a market price for the property then there are absolutely no tax considerations but obviously your friend will then have the money in her estate which just means it would have to be disposed of later. If what you are saying is she want you to have that eventually then there's no point in paying for the house at all. She may as well give you the house sooner rather than later as have you pay it and get the money back down the line. Again though, if the total estate is under �325k it wouldn't make any odds.
Of far greater relevance may well be that she has disposed of capital rather than have the local authority do so and use the funds for her residential care if she eventually needs it. If what you are saying is that will never happen then it has no relevance though.
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