Gifted House for inheritance tax reasons

kimbo1905

My mum and dad are in their late 60's and thinking of buying a house back in the UK to retire in. Their thoughts are to put it in my name so it wont be liable to inheritance tax in the future. Im already paying off a mortgage. Is there any down side to this other than they have to pay extra stamp duty? Can i rent it back to them?

Thanks in advance

noh

The down side is that, in order for the value of gifted property to be disregarded from the estate of your parents, they would need to pay you a full market rent for the period of their occupation and survive seven years from date of gift.
You would be liable to pay tax on the rent received and would have to comply with all relevant legislation in regard to letting residential properties.

Browntoa

In their late 60's it could also be portrayed as deprivation of assets

middleclassbutpoor

If the house is a pure gift- as long as they survive 7 years there are no IHT issues.

If they live in the property then you have to charge them market rate rent. This is because they are still in receipt of the benefit of the asset.

You would need to keep records and consider the income tax consequences if the rent you receive.

Mojisola

kimbo1905 wrote: »

My mum and dad are in their late 60's and thinking of buying a house back in the UK to retire in. Their thoughts are to put it in my name so it wont be liable to inheritance tax in the future.

Will having the extra property put you into the inheritance tax bracket?

If you have a period of unemployment or long term illness, you won't be able to claim means tested benefits because you own another property.

If you divorce or go bankrupt, the other house will be included in the financial assessments and your parents could end up homeless.

If you go ahead, make sure your will makes provision for your parents to be able to stay in the house in case you die before them.

foxy-stoat

kimbo1905 wrote: »

My mum and dad are in their late 60's and thinking of buying a house back in the UK to retire in. Their thoughts are to put it in my name so it wont be liable to inheritance tax in the future. Im already paying off a mortgage. Is there any down side to this other than they have to pay extra stamp duty? Can i rent it back to them?

Thanks in advance

How much is the property worth and do they have thousands of pounds in cash.

getmore4less

Do they have an IHT problem assets over £1million?

kimbo1905

Thanks for the help . Property may be worth up to 1 million . Although not purchased yet

kimbo1905

why would i need to rent it back to them if all the bills are in my name ? Could t they just stay there when they are in UK? wont always be the case?

somethingcorporate

For the sake of £1m and potentially huge risks/downsides why would you not pay for professional advice?

kingstreet

kimbo1905 wrote: »

why would i need to rent it back to them if all the bills are in my name ? Could t they just stay there when they are in UK? wont always be the case?

If they derive any benefit from the gift, it will not leave their estate for IHT purposes. Therefore they may as well buy it themselves.

If they pay market rent and it comes out of normal income, you don't fall foul of the Gifts With Reservation (GWR) provisions.

A discussion with an Estate Planning specialist would be a good idea.