Gifting Inheritance Tax Question?

einsley

I have a hypothetical situation, for which I can't seem to find information anywhere and I've looked all over the government website and even called them...just wondered if anyone has come across this and knows the rules.

If someone was gifted a property, what would happen if they (the donee) were to die within 7 years?
Now I understand that if they were the property donor then dying within 7 years would mean that the property was counted as part of their estate and therefore it would be liable for inheritance tax, but if they were to have recieved the property as a gift, would it still be counted? In theory, it would still be counted as the donors estate for 7 years (in the event of death) so I don't understand how it could be counted as the donee's estate as well. However, I can't find solid information on this anywhere.

Any help?

Brighty

It would be counted as the donee's property the same as everything else, they own it, therefore it counts. The 7 year rule is irrelevant to the donee, as they are not gifting the property to someone else. Just because IHT may be payable by the donors estate if they die within 7 years, does not affect whether or not the donee's estate pay IHT as well. IHT is liable on each death, you don't pay it once and never again. Imagine it was cash. I have £1mill cash, leave it to my son, my estate pays IHT, son gets what's left, he then dies, leaving it to his son, his estate pays IHT on it, and so on.

einsley

so if both the donee and doner died within 7 years of the gift, would the property belong to both of their estates? Thanks for the help

xylophone

I've looked all over the government website and even called them.

You could write

HM Revenue and Customs - Trusts and Estates
Ferrers House
Castle Meadow Road
Nottingham
NG2 1BB

Keep_pedalling

einsley wrote: »

so if both the donee and doner died within 7 years of the gift, would the property belong to both of their estates? Thanks for the help

If the donor is still living in the property it would stay in his/her estate beyond considerably longer than 7 years.

einsley

I might try that next, but I was hoping through a phone call to try and explain my confusion and was met with someone who seemed to know less about the subject than I did from a few hours of research.

xylophone

It has just occurred to me that there is a provision called "quick succession relief" - I am wondering whether it might apply where the donee died before the donor and the donor died within seven years of making the gift - you would need to check with HMRC as above.

xylophone

but I was hoping through a phone call

Better to write and get an answer in writing.

Mojisola

einsley wrote: »

so if both the donee and doner died within 7 years of the gift, would the property belong to both of their estates?

No. The property would be part of the donee's estate and would be inherited according to the donee's will or the rules of intestacy.

There may be inheritance tax to be paid on the value of property but the property itself will not be part of the donor's estate.