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Can My Mother Transfer Her Property Into Mine and My Sister's Name?

Question Can my elderly mother transfer her property, which she owns, into my mine and my sister's name without incurring any costs, or are there any provisos? She wants to do this in case she has to got to go into a care home in the future and does not want to sell her property to pay for it?

Answer: From a tax perspective she can probably do so. a) As far as capital gains tax (CGT) is concerned, if she has lived in all of the house for all the years of her ownership, as her main residence, then transferring it will be exempt from CGT.

 

b) As far as stamp duty is concerned, if your monther transfers it to you,her children, as a gift, i.e. without receiving anything in return, then the transfer will be exempt from stamp duty.

 

c) As far as inheritance tax (IHT) is concerned, there is no IHT to pay now (being a transfer to an individual - a PET), and if she lives for seven years after the transfer, then the value of the house will not be included in her taxable estate when she dies. However, if she does not live for seven years after the gift, then the house will be included in her estate at death. What we have just now explained about IHT applies if your mother does not continue to live in her house. But if she does, then this is classified as a 'gift with reservation', and the house will always be included in her estate at death, even if she lives for seven years after the gift.

 

From a practical/legal perspective, sometimes transferring one's house to relatives is effective in avoiding paying for nursing home care, and sometimes it is not, depending on a number of factors, e.g. the length of time between the transfer and going into the nursing home, etc.

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