GWROB and IHT - Tenants in common

Throwaway212

Hi, 

If parents own a home, and I move in to care for them while they gift me say 50-75% of the house as tenants in common. What are the tax implications of that. Would IHT only apply to the remaining percentage of my parents? Also what about gift with reservation of benefit? I would probably be the main contributor of house hold bills (say 90% of total outgoings).

Jeremy535897

Here is an article that discusses the issues:
https://www.which.co.uk/later-life-care/financing-care/gifting-assets-and-property/legal-transfer-of-property-a4z0d8g9xpj9

Throwaway212

Hi, thanks for this. In the article for sharing a home section it says:

If you give half of your home to your children, who then move in and share the bills, the half that you have given away won’t be treated as part of the estate for inheritance tax purposes – as long as you live for seven years after making the gift.

However I'm a little confused on sharing the bills part. Do the bills have to be 50/50? Or can the person who moves in pay 90%+?

Jeremy535897

It needs to be a sensible arrangement. I think if they give away 90% of the home and you pay 90% of the bills, that is potentially a GWR. If they give away a third of the house to you and you pay a third of the bills, that is unobjectionable.

Throwaway212

Jeremy535897 said:

It needs to be a sensible arrangement. I think if they give away 90% of the home and you pay 90% of the bills, that is potentially a GWR. If they give away a third of the house to you and you pay a third of the bills, that is unobjectionable.

How does HMRC go about verifying this? Seems to be a nightmare trying to figure out who is paying over say a 30 year period. I don’t see how that’s possible.

Throwaway212

Jeremy535897 said:

It needs to be a sensible arrangement. I think if they give away 90% of the home and you pay 90% of the bills, that is potentially a GWR. If they give away a third of the house to you and you pay a third of the bills, that is unobjectionable.

would the opposite also potentially be GWR, say gift 30% of the house but then I contribute 90%?

Jeremy535897

The problem is that if there is a likelihood of a GWR, it may be down to the executors to disprove it. On the face of it, parents giving away 90% of a house to you but then still living there is a GWR, because they continue to enjoy more than 10% of it. You might argue that the 90% contribution you make somehow negates that, but it is a very difficult argument to make. If they give you 30% of the house, but you contribute 90% of the costs, that is probably OK (although you might be making a gift to them).

Keep_pedalling

In your last thread you said that IHT was not an issue for your parents, so rather than ask questions about what sound like madcap schemes, why not simply tell us what you are trying to achieve. A rough idea of your parents net worth would also be useful.

uknick

Keep_pedalling said:

In your last thread you said that IHT was not an issue for your parents, so rather than ask questions about what sound like madcap schemes, why not simply tell us what you are trying to achieve. A rough idea of your parents net worth would also be useful.

As Keep said, why not first work out whether the value of the estate will attract IHT under the current rules (no point planning for what may happen to the rules as this way is madness ).  If not, why worry abut setting up convoluted schemes to avoid it??.

Throwaway212

Keep_pedalling said:

In your last thread you said that IHT was not an issue for your parents, so rather than ask questions about what sound like madcap schemes, why not simply tell us what you are trying to achieve. A rough idea of your parents net worth would also be useful.

I posted this for some information, not because it’ll effect me now. No harm in that.

Keep_pedalling

Throwaway212 said:

Keep_pedalling said:

In your last thread you said that IHT was not an issue for your parents, so rather than ask questions about what sound like madcap schemes, why not simply tell us what you are trying to achieve. A rough idea of your parents net worth would also be useful.

I posted this for some information, not because it’ll effect me now. No harm in that.

No but it would be nice to know this was just a hypothetical question. Many question that come up in the forums lack context or detail, and / or as in this case, conflict with previous posts, so to provide a useful answer questions need to be asked of the OP.