question about house, IHT and "A Gift with a Reservation of Benefits"

freefreefree

My friends Granddad died recently.
He gave his house in the UK to his daughter 10 years ago and moved to France (his daughter has been living there since then).

More recently he would come back to the uk for hospital appointments and would visit for a couple of weeks at a time in his daughters house. He would do this maybe once or twice a year.
He may also have come to stay in the house before that but its a bit vague at the moment as they are still quite upset.

I have a few questions.
1. If he didn't stay in the house at all for the first 7 years, then does it matter how much he stayed in the house recently?

2.1 If he did stay in the house with his daughter a couple of times a year for the last ten years would that be enough to make this "a gift with reservation of benefit"?
2.2 If yes, would the value of the whole house be taken to be part of the estate or just a proportion based on his perceived benefit ongoing from the property?

3.1 The lengths of duration are still a bit unclear as they are still very upset so i am just trying to help with the legal stuff while they grieve. But surely there must be an amount that you can stay in your child's house before it triggers IHT laws?
3.2 Would anyone care to take a stab at guessing how much visitation would be considered acceptable?

Hopefully someone amazing can help me out! Thanks!

cte1111

I would say that the house would be an exempt transfer, as it's clear that he didn't live in the house or have an interest in the house, other than staying as a guest.

xylophone

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/intro-iht-plannning.htm#3
http://www.hmrc.gov.uk/cto/customerguide/page20.htm
http://www.sykesanderson.com/Service_France/articles/inheritance_tax_comparison.asp

The father was a UK resident and owned and lived in the property?
Ten years ago he gave the house to his daughter as an outright and unconditional gift? She moved in and then he emigrated and became resident and domiciled in France?

He did not "retain an interest" ( e.g. by making the gift conditional on his being able to live in the house whenever he liked)?

John_Pierpoint

http://www.pwc.com/jg/en/publications/uk-statutory-residence-test.jhtml
http://www.hmrc.gov.uk/international/rdr3.pdf

System

I can't see that it matters which country he is resident in for tax purposes. The fact is he didn't own the house and only stayed there as a guest.

jimmo

This seems to cover the original question.

http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM14333.htm


John, I’m not too clear why you brought it up but the 2013 Finance Bill received Royal assent on 17 July so, as the Finance Act 2013, it is now the law.

http://www.hmrc.gov.uk/inheritancetax/solicitors-advisers/fb2013-assent.htm

John_Pierpoint

I think I just wanted to remind future readers of this thread that the residency status of "ex pats" has (in theory) now been more clearly defined.

Reading between the lines of your link, does it look like there is now an IHT loophole concerning foreign spouses, that needs to be closed ?

I often wonder how HMRC can track the days spent in the UK by reasonably wealthy individuals, BUT the border agency has little or no idea of the actual immigration and emigration figures ?

Britain’s visa system is in disarray, entry controls at London’s Heathrow airport are a shambles and 300,000 asylum and immigration cases are unresolved. = Financial Times