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Tax Implications for Receiving a share of Equity From My Mother's Property

Question

My mother's property has been willed to me but I currently own a property; what would be the tax implications if she were to transfer a share of the equity to me from her property, which is completely freehold asset?

 

My own property is currently in an negative equity situation.

 

Arthur Says:

From my reading of the question, it seems to me that your mother is still alive. Therefore, the fact that the property has been willed to you is not relevant, since no transaction has actually taken place. The fact that you already own a property, and that it is in a negative equity situation is also not relevant.

 

What is relevant is that you mother is transferring a share of her property to you. If you are not paying her anything, i.e. it is a gift, then there is no stamp duty on the transfer. If there is a mortgage on the property, and you take over responsibilty for all or part of the mortgage, then the amount of the mortgage you take responsibility for is considered as 'payment', and there could be stamp duty according to the value of this amount.

 

If your mother has lived in this house as her 'principal private residence' (ppr) for all the time she owned it, then she will not be liable to any capital gains tax (cgt) on this transfer. Since a mother and son/daughter are considered 'connected persons' in tax legislation, she is deemed to transfer the property to you at 'present market value'. Therefore, your 'base cost' when you want to sell or dispose of this property in the future, is todays 'present market value'.

 

If she has not lived in the property as her ppr for all the time she owned it, then there could be cgt on this transfer, if the property is worth more now than what she paid for it when she acquired it. This would need some calculating.

 

If your mother wants to live in the property after transferring part of it to you, then there could be inheritance tax and 'pre owned asset' income tax issues to deal with. 

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