Help! Advice needed please about inheritance and capital gains tax

[whattodo2016]

Sorry, this is more a question of Would IBU not to sign some documents?

20 years ago, after my parent's divorce, my sister and I bought a house with my mum, (so we had a third ownership each) We subsequently moved out in our late 20s leaving my mum to live in the house paying the mortgage. She still lives there. The house is worth about £150,000, (in the North) Our brother has recently been advising her that as my sister and I still remain on the mortgage, we will be subject to Capital Gains Tax when she passes away and if we sign the house totally over to my mum we will not pay any tax as we will inherit (under the threshold) as part of the will. My mum thinks this is a good idea too.

Is the advice that he is giving her accurate?

If my mum were to need a nursing home, couldn't she lose all her property if we sign it over? At least this way, they can only take a third, can't they?

Lastly, could our brother be pulling a fast one? As it stands my mum's third of the house goes to our brother. If we sign it over, I am concerned that he will somehow encourage her to make her whole will out to him.

We all have a very good relationship with my mum but my brother is quite obsessed with money and has some influence over our mum.

Please could anyone tell me if his advice is accurate and also if there is anything we need to consider, that we haven't already thought of. Thank you.

Mind you this is a complicated situation - your dm is paying the mortgage but you all still own a third each. So does that mean that dm is effectively buying you and dsis a third share in a house, but not your db?

You could also argue that by DM paying only a tiny mortgage and no rent to OP and her sister they have been subsidising her living cheaply for years.

Don't do it. Remember lettings allowance as well as annual cgt allowance (because you lived there). Given total value 150 and up north I'd be amazed if you have any cgt liability.

Yes I think your brother's dangerously misinformed at best and at worst...much worse.

If for some reason you did sign the house over to your Mum she would simultaneously need to make a new will.

Is it still mortgaged? Or paid off? Is she very elderly / frail ? Or still working and paying the mortgage?

There are a few people here who are a bit confused about CGT on a person'a death. When a person dies there is no CGT, and the cost of the property for CGT purposes is uplifted to the market value at the time of death. Therefore if your mum dies and you sell the property straight away it is very unlikely that there will be any CGT, as the property wouldn't have increased much in value since her death.

However, if you and your sister transfer it to her now, there may well be some CGT to pay.

What your brother is suggesting is therefore all completely wrong. But you know that already! Perhaps it is innocent and he doesn't realise, but I think you should give an accountant a call.

As others have said the transfer would not be free- you would need to get a valuation for tax purposes, cut would be payable based on that value, plus legal fees for the transfer and re registration. And that assumes the mortgage company are happy to take you two off it which they may not be.

good point Basicbrown.! It does become so difficult with these things to work out the true financial value of who's getting what - very easy to overlook things!

I think shared property can work well within families, but in other cases it can be a bit of a minefield! eg if one person wants to realise their share but the others want to go on living in it, or someone's financial circs change. Another recent thread really made me realise the pitfalls. But in this case it doesn't seem that there's that sort of issue.

I suppose the key thing to remember is that the phrase 'sign over' actually means 'give away and relinquish all control over!'