Transferring a property tax implications

mum1964

Hi
Apologies if this is not in the correct place.

My husband and I have been made sole beneficiaries of a relatives estate. The main thing is a property worth In The region of 650k. Upon her passing we fully intend to move into it and make it our main residence. Thus becoming our principle place of residence.

At the moment we live in the Family home which is mortgage free. Our two sons want to carry on living here, upon the relative passing.

We need to remain in our family home until such time that we inherit the relatives home.

We have estimated that to renovate the relatives home and get it ready for our retirement will take 5 years. During which time we shall be living and working to fund this.

If I transfer the family home to my children by way of gift, with full title guarantee, and they are to hold the property on trust for themselves as joint tenants.

Will the seven year tax rule applie, should my husband or I pass away.

CLAPTON

mum1964 wrote: »

Hi
Apologies if this is not in the correct place.

My husband and I have been made sole beneficiaries of a relatives estate. The main thing is a property worth In The region of 650k. Upon her passing we fully intend to move into it and make it our main residence. Thus becoming our principle place of residence.

At the moment we live in the Family home which is mortgage free. Our two sons want to carry on living here, upon the relative passing.

We need to remain in our family home until such time that we inherit the relatives home.

We have estimated that to renovate the relatives home and get it ready for our retirement will take 5 years. During which time we shall be living and working to fund this.

If I transfer the family home to my children by way of gift, with full title guarantee, and they are to hold the property on trust for themselves as joint tenants.

Will the seven year tax rule applie, should my husband or I pass away.

whilst you are living there no: it will be considered a gift with reservation

mum1964

CLAPTON wrote: »

whilst you are living there no: it will be considered a gift with reservation

So if we move out then the seven year rule applies

mum1964

Well let's be honest, at the end of the five years we plan to sell the house, at a significant profit. At this point we will move back to the family home and transfer it back to us. Thus possibly avoiding capital gains tax on the inherited property.
Is this allowed.?

xylophone

If you gift the house to your sons it will be theirs absolutely.


They will be the legal and beneficial owners.

You will move out and move in to the house you have inherited.

It becomes your PPR so no CGT on sale.

You say that you will return to your sons' home.

How do you know that they will welcome this?

How do you know that they will be willing to give the house back to you?

Or do you intend to buy it from them?

Keep_pedalling

You may be the main benificiaries now but a new will could change that, or if your relative needs long term care then the house may need to be sold before she dies, and your inheritance may disappear or be significantly reduced, so don't go doing anything silly like give your house away now.

The time to make decisions is when you know for sure you are going to get this house. If you then gift your current house to your children, you will need to survive 7 years to avoid the gift falling within your estate, but you can cover that eventuality by taking out a second death insurance policy which will cover any IHT that comes about from your early demise.

antrobus

mum1964 wrote: »

Well let's be honest, at the end of the five years we plan to sell the house, at a significant profit. At this point we will move back to the family home and transfer it back to us. Thus possibly avoiding capital gains tax on the inherited property.
Is this allowed.?

Your plan is unnecessarily complicated.

If you own more than one property, you can nominate which one is your principal residence for CGT purposes. You would have to do that within two years of acquiring the second home, and you would actually have to live there.

It would therefore be much simpler to simply move into the other property, contact HMRC to make the necessary declaration, and allow your sons to continue to live in the family home rent free. No point in going through some contrived process that might be caught by the General Anti Abuse Rule.

(I don't know whether it would be, but why take the risk?)

But don't count your chickens. Stuff happens.:)