Inheritance tax house value ?

metrobus

when reporting the value of the estate for inheritance tax calculations and there is a house that falls within the gift with reservation rules, is it the value at the time the gift was made or when the gifter passed away?

blue.peter

See HMRC's Inheritance Tax manual. This says:

The gift with reservation provisions provide that the gifted property is deemed to be treated as part of the donor’s estate immediately before death.

My interpretation of this is that the relevant value will be as at the donor's date of death. Logically, if the value to be used was at the date of the gift, it would have to be treated as ceasing to be part of the estate at that date. However, I am not a tax specialist (well, not in this area of taxation), so I can't offer any sort of guarantee that I'm right.

I'd recommend talking to HMRC's Capital Taxes Office (or whatever it's now called) and asking them. Contact details are here.

pphillips

By definition, a GWR never leaves the donor's estate and therefore it's treated as a gift on death.

Keep_pedalling

The value at the time of death is what you declare. Once sold you will then have to deal with the issue of capital gains tax. Any gain between the date of the gift and the date of the sale will be subject to CGT rules.

This  is one reason why it is really dumb to give your home away.

metrobus

No CGT to be paid since it’s Principal Residence 

Keep_pedalling

metrobus said:

No CGT to be paid since it’s Principal Residence 

So are you saying that the person receiving the gift of the house has also been resident in the house since it was gifted? If that is the case then I believe it effects how much of the gift is treated as a GWR.