Inheritance tax or Add name to Deeds?

My parents were advised by friends that if they add me (their son) to their title deeds, this would help avoid inheritance tax. I understand they would need to survive another 7 years to avoid other taxes but was wondering if they did, is this actually accurate? 

Any advice would be much appreciated. 

Summary of situation:
Parents own two properties in UK and probably have an estate worth over £700k (roughly). 

They wish to leave one property to me. 

They also own one property abroad but not sure if this would be included separately as they have dual citizenship. 

Me and my partner (not married) are full time and part time workers (respectively) with two kids. We do own a house (still paying off mortgage). 


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  • Keep_pedalling
    Keep_pedalling Posts: 16,213
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    edited 6 November 2023 at 10:15AM
    Your parents friends are ill informed, this would be classed as a gift with reservation of benefits so would not fall out of their estate after 7 years. In addition there could be a CGT liability when it is sold some time in the future.

    Do your parents have a joint net worth of more than £1M? If not it is highly unlikely that any IHT would be due.


    I think it is you who should be worried about IHT on your own estate. Nor being married or in a civil partnership could see your estate having to pay IHT if you met an untimely end, something that would not happen if you were married or a civil partnership.  If either of you have assets exceeding £325 k (including 50% of joint assets) then you should consider your marital status seriously.

    Do you both have wills and lasting powers of attorney in place? If not that needs sorting out ASAP, dying intestate can be disastrous for a surviving partner especially one with young children. Loosing mental capacity though accident or illness without a financial LPA in place will also make like extremely difficult for a partner especially an unmarried one.
  • saajan_12
    saajan_12 Posts: 3,571
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    Which property's deeds do they want to add you to? If its one they live in or even use as a 2nd home, then its not really a clean transfer as they still 'reserve' the rights to stay there. So it would be treated as a 'gift with reservation' and effectively part of their estate until they move out, which may just be upon death. 

    Anyway, at a £700k total estate size, they're probably within the allowances to just pay 0% IHT the normal way.
  • saajan_12 said:
    Which property's deeds do they want to add you to? If its one they live in or even use as a 2nd home, then its not really a clean transfer as they still 'reserve' the rights to stay there. So it would be treated as a 'gift with reservation' and effectively part of their estate until they move out, which may just be upon death. 

    Anyway, at a £700k total estate size, they're probably within the allowances to just pay 0% IHT the normal way.
    Indeed. I can’t emphasise enough the point also made regarding capital gains. The op would be liable to capital gains on the increase in value between the time of transfer and any eventual sake. 

    At the moment there will never be any prospect of capital gains tax. 

    In short, how change a house, free of taxes, to one potentially subject to two separate taxes.
  • Your parents friends are ill informed, this would be classed as a gift with reservation of benefits so would not fall out of their estate after 7 years. In addition there could be a CGT liability when it is sold some time in the future.

    Do your parents have a joint net worth of more than £1M? If not it is highly unlikely that any IHT would be due.


    I think it is you who should be worried about IHT on your own estate. Nor being married or in a civil partnership could see your estate having to pay IHT if you met an untimely end, something that would not happen if you were married or a civil partnership.  If either of you have assets exceeding £325 k (including 50% of joint assets) then you should consider your marital status seriously.

    Do you both have wills and lasting powers of attorney in place? If not that needs sorting out ASAP, dying intestate can be disastrous for a surviving partner especially one with young children. Loosing mental capacity though accident or illness without a financial LPA in place will also make like extremely difficult for a partner especially an unmarried one.
    Thanks for your advice. So if their estate is under £1M (would this include overseas estate? They have dual citizenship), then you think there is no IHT? I thought there is IHT for anything over £325,000? 

    Me and partner have a house worth around £400,000 (joint mortgage) and less than £70k in cash and possessions etc. 
  • saajan_12 said:
    Which property's deeds do they want to add you to? If its one they live in or even use as a 2nd home, then its not really a clean transfer as they still 'reserve' the rights to stay there. So it would be treated as a 'gift with reservation' and effectively part of their estate until they move out, which may just be upon death. 

    Anyway, at a £700k total estate size, they're probably within the allowances to just pay 0% IHT the normal way.
    They are intending to add my name to the house they currently live in. From what I read, I understand gifting is not a viable option as they would need to either move out of pay me rent. 

    Therefore I thought that the most appropriate option is to add my name to the title deeds. Is it not the case that if they survive another 7 years, it would not be classed as a gift or part of their estate?
  • As a side note, I understand there is a question of capital gains tax but think we were working on the basis that by the time I become sole owner and the time (should) I sell, the difference in value may not be that great 
  • saajan_12 said:
    Which property's deeds do they want to add you to? If its one they live in or even use as a 2nd home, then its not really a clean transfer as they still 'reserve' the rights to stay there. So it would be treated as a 'gift with reservation' and effectively part of their estate until they move out, which may just be upon death. 

    Anyway, at a £700k total estate size, they're probably within the allowances to just pay 0% IHT the normal way.
    They are intending to add my name to the house they currently live in. From what I read, I understand gifting is not a viable option as they would need to either move out of pay me rent. 

    Therefore I thought that the most appropriate option is to add my name to the title deeds. Is it not the case that if they survive another 7 years, it would not be classed as a gift or part of their estate?
    I think that the easiest way to explain this is as follows. 

    If they gift all or part of their home to you and continue to live in it the gift, for the purposes of inheritance tax, will be deemed never to have happened. 

    The seven year rule is completely irrelevant. 
  • Grumpy_chap
    Grumpy_chap Posts: 14,429
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    They are intending to add my name to the house they currently live in. From what I read, I understand gifting is not a viable option as they would need to either move out of pay me rent. 

    Therefore I thought that the most appropriate option is to add my name to the title deeds. Is it not the case that if they survive another 7 years, it would not be classed as a gift or part of their estate?
    That would still be GWR (gift with reservations) so not avoid IHT.

    It may still be DoA (Deprivation of Assets) should either parent require care.

    The part of your parents house will still count as your asset so can be considered should you need to claim UC or divorce etc.

    You will still be subject to CGT whenever you come to sell your part ownership.

    This is really just fraught with downsides and difficult to see what upside there is.
  • As a side note, I understand there is a question of capital gains tax but think we were working on the basis that by the time I become sole owner and the time (should) I sell, the difference in value may not be that great 
    You would still be liable for CGT on the part(s) transferred to you with the gain applying from the date of transfer to the eventual sale.
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