My brother, my mum and I own a property that we live in. We would like to take our names off the property and make my mum the sole owner of it. Would my mum have to pay any capital gains tax (CGT) on this? Could she then gift the property to us along with my other two brothers as a potentially exempt transfer, so that if she lives for more than seven years we won’t be liable to Inheritance tax (IHT) on the property she has gifted us?
Arthur Weller replies:
Taking the names of yourself and your brother off this property so that your mother is the sole owner will not trigger any CGT for your mother because she is the recipient, but it may trigger CGT for you and your brother. However, since you live in the property, quite likely there would be no CGT liability, due to principal private residence (PPR) relief. However if the whole purpose of the exercise is so that the four siblings end up owning the property, perhaps 25% each, it would be simpler for your mother to gift 25% of the property to one 'new' brother, and then your mother and the first two siblings each gift 8.3% of the property to the second 'new' brother, so that everyone ends up with 25%. Again, PPR relief may be available to mitigate any CGT liability. But it must be added that if your mother continues to live in the property rent-free, the gift will not be effective for IHT purposes.
This question was first printed in Tax Insider in June 2019.