Tax Implications of Gifting a Rental Property

Q.2 Gifted rental properties – Any present and future tax liabilities? In 2007, my father and mother purchased an investment property for £198,000 with a £60,000 deposit. In 2015, my father transferred the mortgage and title deeds into my name and left my mother on them. No money was exchanged when it was transferred, and it is currently being rented out. The market value of the property is £300,000, but we are not planning to sell it yet. Are there any tax implications or fees that will be due and if so, when may that be?

Arthur Weller replies:

From what you have written, it appears that you are a joint owner together with your mother. If so, half the rental income is yours, and you should be declaring this annually to HMRC. If the mortgage is also joint, then both you and your mother can claim Disclaimer: This ‘Tax Insider’ newsletter is produced for general guidance only, and professional advice should be sought before any decision is made. Individual circumstances can vary and therefore no responsibility can be accepted by the contributors or the publisher, Tax Insider Ltd, for any action taken, or any decision made to refrain from action, by any readers of this guide. All rights reserved. No part of this guide may be reproduced or transmitted in any form or by any means. To the fullest extent permitted by law, the contributors and Tax Insider Ltd do not accept liability for any direct, indirect, special, consequential or other losses or damages of whatsoever kind arising from using this guide. half the annual interest against your rental income (calculating the mortgage interest relief under the rules introduced from April 2017). As and when the property is eventually sold, you will receive half of the sale proceeds. Your base cost for the capital gains tax computation will be the value of half of the house in 2015 when it was given to you.