Gifting home to avoid inheritance tax?

bikeman

Can we avoid inheritance tax if my parents gift me their home (and survive 7 years), remain resident and pay me the market rate rent from their pension income?

jimmo

Yes, your parents paying you the market rate rent will mean that their gift to you of their home will become a PET (Potentially Exempt Transfer) where the 7 year rule kicks in, rather than a gift with reservation.
However you will be liable to Income Tax on the profits from your property letting business and liable to Capital Gains Tax when you sell the property.

John_Pierpoint

Do you currently share this home with your parents?

opinions4u

Deprivation of Assets

I would read the link above, Google more on the subject, pay for the professional advice of an accountant and also take legal advice on the subject.

It could, in so many ways, end up costing more than it saves.

bikeman

John_Pierpoint wrote: »

Do you currently share this home with your parents?

No I don't live with them.

bikeman

opinions4u wrote: »

Deprivation of Assets

I would read the link above, Google more on the subject, pay for the professional advice of an accountant and also take legal advice on the subject.

It could, in so many ways, end up costing more than it saves.

Good advice. Hoefully it will be several years before carehome fees become an issue. I wonder how much time between gifting a property and need care is acceptable.

le_loup

No time limit, it is a very subjective assessment. A council official will look at the history ans ask himself, why were the assets put into another name. Guess what his judgement might be?
Do as o4u says and google away.

John_Pierpoint

Yes but who do they sue when they try to put a legal charge on a property that is not owned by the care home resident?
Suppose it has been sold in the last (say) 10 years to someone or some organisation that appears to be totally unrelated?
Is this something that is going to plague conveyancing practice, like the agrieved wife discovering that her businessman husband has remortgaged "his" family home?

le_loup

John_Pierpoint wrote: »

Suppose it has been sold in the last (say) 10 years to someone or some organisation that appears to be totally unrelated?

Unrelated is the important word.
Transfering ownership from father to son is hardly in that catagory.

SallyG

Can I give my half share of the house that my adult children and I live in to my children without the consent of the other tenant-in-common, their estranged father?