My mother would like to gift her flat to my 2 brothers and I?

Reply to the comment left by "Joe Di Fede" at "20/04/2016 - 14:36":

There's no stamp duty to pay, as you aren't paying anything for the house: it's a gift.

The process for transfer is very simple: you don't even need to use a solicitor. The Land Registry provide guidance on what forms to fill out. Their charge is £40 to change the names on the title deeds. It may be best to use a solicitor though for witnessing the transfer documents, so they can confirm your mother was of sound mind on the date of transfer and made the gift of her own free will.

Get at least two valuations from estate agents to establish the base value for the property on the date of transfer. These valuations will be your evidence for HMRC when you eventually sell the property and become liable for capital gains tax, otherwise you can bet that HMRC will use a low base value like £325K in order to secure more tax.

If the property is in the name of you and your two brothers in equal parts, that doesn't mean that the rent has to be split in equal parts. You can sign a declaration to state that the rent may all be paid to the brother who is on the lowest tax rate, to minimise your income tax liability. If he then chooses to make a financial gift to his two brothers once a year or to your mother, that's his business.

Reply to the comment left by "Joe Di Fede" at "20/04/2016 - 14:36":

Joe, my understanding is that stamp duty is payable only when a property is sold/purchased. It does not apply when it is a gift.

My father 'gifted' a property to my brother and I (my grandparents home which he had inherited) and no stamp duty was payable.

Reply to the comment left by "Tony Atkins" at "20/04/2016 - 14:49":

Thank you Tony, I am very grateful for the information you have provided, didn't have a clue about this topic.

I am in the process of helping my mother to renew the lease, which currently is 64 years remaining, so would probably need to complete the lease renewal for 2 reasons before gifting the property to my Brothers and I:

1: if my brothers and I take over the property we would have to wait 2 years before applying for a lease extension I believe.

2: Current value of the property will be considerably lower due to 64 years lease, so the land registry value when transferred to my brothers and I will be lower than the current market value, this will mean in the future we will be hit with a larger capital gains tax bill.

Also regards to the rental being paid to the lowest earning brother, my 2 Brothers live in Australia, so will pay the rent to the lowest earner of the 2.

Reply to the comment left by "Steven Burman" at "20/04/2016 - 15:17":

Thanks Steven.

As the property would transfer, there would be stamp duty to pay.
Just a note about you all helping her with a cash gift to help her to pay the mortgage, you can each gift £3,000 p.a. without an IHT liability.

Don't we now have an additional nil rate band commencing at £100,000 and increasing each year for IHT on the main home?

Hi Joe

Some good comments above. Please bear the following in mind:

If the property is gifted to you then you will take it over at the original price paid for it plus any additional capital costs, extension of lease etc. Your CGT bill when you dispose of it will be based on this value.

If you wish to take it over at market value then your mother would be liable for the CGT now.

If your mother continues to live there rent free then there is the reservation of benefit rules to consider which may mean it is not IHT efficient.

If rent is paid and it is paid to an overseas landlord then the recipient will have to register under the non-resident landlord scheme and tax may have to be deducted on the rent paid to him. This can be repaid if a UK tax return is then prepared and the tax deducted is too much.

Check out the situation with regard to your father's estate - there may be additional IHT allowances available.

Confirm you mother's IHT position once your father’s position has been determined.

If your mother is likely to survive until 2020/21 then by then there will be an additional £175,000 nil rate which can be added to her estate making her nil rate band, including her main residence £500,000. Depending on your fathers IHT position this could increase to up to £1 million. At this level it could be better to wait rather than transfer the property now as if all of her estate is covered by the nil rate band you would receive the property at a higher base cost (probate value) and there would be no tax to pay.

Make sure your mother has written a will to take account of her wishes.

Take full professional advice before doing anything - getting it wrong can be expensive!