Property Tax Question (Multiple Houses)

Inheritance tax (even if it's zero) cancels liability to capital gains which have occured up to date of death. Therefore any CGT your mother would become liable for upon sale would be based only on the increase in value occurring during her ownership of it.

That would certainly work. Is your mother of a generous enough disposition to do that? If your sister were then to own it as her main home, no CGT liability would accrue to either of them - not to your mother becuase she won't have owned it long enough for any significant gain to arise, and not to your sister because it's her home).

Since it wouldn't reduce her liability, it's not worth considering. It's also administratively easier to sell it in her own name.

She could sell it to your sister (instead of giving it to her), and also lend her the money with which to buy it. She would of course have to pay income tax on any interest she received. But if she's generous enough to even think of giving her the house, she might be quite happy not to charge any interest. Just getting back the capital value, albeit in dribs and drabs, is still better than giving the house away for nothing.

Of course, when I say "lend the money", I'm not referring to real money, only to pretend money. Mum has house and a bag of Monopoly money. She lends the bag to Sis, and Sis uses it to buy the house off Mum. Then the pretend-money is back where it started (with Mum) but Sis still owes Mum the real money Mum lent her. Too complicated? OK, forget the Monopoly money. Sis buys the house off Mum but Mum lets her pay for it in instalments. Sounds better, but it's still technically a loan.

Isn't it nice to see a family who are a proper family and looking out for each other. The only problem with this gift idea is that (maybe) it might cause an IHT problem if the mother dies within 7 years.

Isn't an alternative (assuming the father died less two years ago) to apply for a Deed of Variation ie rewrite the Will to what (all beneficiaries in the will must agree) it *should* have said?

Tut, tut. Black mark for Troy. Heavy lunch? When following up and quoting, it is customary for the comments to relate to the quoted text. My passage you quoted does not suggest "this gift idea". In my example Mum is *selling*, not *giving*, the house to Sis. If Mum should die before Sis has repaid the loan, Sis would still owe the estate the unpaid part. The only "gift" involved is of the interest, but that would clearly be a gift out of income.

But yes, the previously mentioned idea of giving the house to Sis would involve IHT risk and yes, retro-modifying the will under which Mum inherited the house would have the desired effect. Moreover, it would be unlikely (wouldn't it?) for any of the other beneficiaries to object to one of their number saying "I don't want this, I want X to have it instead".

Mailgate allows very little quoted text and it is customary when posting in Mailgate to take a bloody great chisel to the quoted text and lop off enough of it get it past the censors, please accept my apologies.

Many thanks for your suggestions - although others are of course always welcome. I don't think that the value of the property will increase rapidly where it is. Consequently, our main concern has been answered.

We haven't yet decided what to do with the property. We may keep it as a spare home if it doesn't cost too much to run. Alternatively, my mother may decide to sell the property and distribute the proceeds amongst us 3 siblings. Personally, I would be prepared to forfeit my share in favour of the sister referred to above as she is the only one who doesn't have a good job or her own property - but I have yet to discuss this with my other sister.

Thanks again to all who responded.