Buying a house for a personal agreement

Linton

Oliver32 said:

Thanks for all your reply’s, booked a meeting with a solicitor who specialises in these things, the last thing we want to do is break the law or not do anything properly.
many thanks 

Yes, you, uncle  and the solicitor will need to go through all the what-ifs. eg you dying. If something goes wrong and the house has to be sold uncle could be left homeless so his interests must be protected.  That is surely more important than anything else.

saajan_12

km1500 said:

"It would count as a gift with reservations for inheritance tax purposes."

No it wouldn't, as the nephew  would be then living there as their main personal residence.

Uncle gifts house to nephew - this is nephew's only and main residence - the 7 year IHT clock starts ticking it is not a gift with reservation.

Once it is the nephew's house he can invite his uncle (or indeed anyone else) to stay with him on whatever terms he wishes, for example the 'rent a room' scheme

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

  Not a chance
The uncle is giving the house under the proviso that he can continue living there. He wouldn't give away the house outright as he won't then have somewhere to live. Disconnecting the two would be fraudulent, in the same way as if you disconnect <helping McDonalds with their orders> and <McDs giving you money as a gift> to avoid income tax. 

TBagpuss

Getting professional advice is the best option - one possibility might be for your uncle to put the house into joint names - if it is done so you own as joint tenants then this would mean the house would automatically becomes yours if he dies, and you could have a separate agreement in relation to what you pay him and how it is dealt with. 

km1500

@saajan_12

GWR is when the eg patents gifts the house but continue to live there as sole occupiers ie the benficial.interest remains with the paernts

if the parents gift the house and it is the child's main residence ie some of the beneficial interest transfers to the child then it becomes a PET as long as the parents contribute to running costs etc

see this article for example - (exceptions)


https://www.russell-cooke.co.uk/insight/briefings/2022/having-your-cake-and-eating-it-gifts-reserving-a-benefit/


and see also


 https://www.taxinsider.co.uk/iht-gifts-with-reservation-share-and-share-alike-ta

sheramber

No mention of uncle contributing to running costs and nephew will be paying uncle money to live there.

km1500

It should be the other way around ie as the nephew now owns the house the uncle should pay his 'keep'

Marvel1

Wouldn't it be better to leave as it is and do what you do now, and in his will leave it you?

km1500

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332

further info

SavingPennies_2

At 70 he could quite possibly live another 20 years or more, what if your circumstances change in that time? I don't understand why you can't keep the arrangement you have where you are both already benefiting (you have a nice home to live in and he has an income from your rent) then he can leave you the home in his will when he dies (assuming he passes before you, which is no guarantee).

GrumpyDil

km1500 said:

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332

further info

Aren't you missing the part where OP says "The house is mortgage free and he wants me to have the house in my name in return I pay him the agreed amount every month" which seems to fall foul of part D in your HMRC manuals link where it says " if, and for so long as, all the joint owners remain in occupation and provided the gift itself is unconditional and there is no collateral benefit to the donor."