Iht and gift

V2001

Father gifts half share of house to son. This is a gwr as they did not meet sharing rules.

4 years later son buys father's half share in house at slightly above market value, and now owns it fully. Son lives at house. Father moves out and purchases his own house.

17 years later Father passes away. Does the above gift of half share need to be declared anywhere in iht403 forms as its well past the 7 years and father does not have a reservation in gift anymore? And is any IHT due? can full RNRB be claimed on Father's property by the son.

Keep_pedalling

The gift would cease to a GWR at the point he moved out, and it has been well over 7 years since that occurred so it does not have to be declared.

Whether the full RNRB can be declared depends on the value of the house he lurched to live in after moving out of the original home. If it is £175k or more then the full amount can be claimed, below that and the value of the house is all that can be claimed. The downsizing rule does not apply here because the move occurred long before it was introduced.

V2001

The value of the house is 620k after the original home.

So won't get into trouble saying no to any gifts being made after 1986, as this is what form iht400 asks about before it says fill in form 403 about gifts.

Keep_pedalling

V2001 said:

The value of the house is 620k after the original home.

So won't get into trouble saying no to any gifts being made after 1986, as this is what form iht400 asks about before it says fill in form 403 about gifts.

No, if you read the associated notes (pages 18 & 22) you will see that this only applies to chargeable gifts that are not covered by any exemptions.

V2001

I had a read it seems that it applies to me in my case as wasn't to a partner , was over £250, gifts over £3000 and anything where deceased didn't receive full value in exchange.

So seems I have to fill in 403 but I'm answering no to most things . I think they trying to determine if the gift has a reservation but there's no clear way for them to determine this.

Keep_pedalling

V2001 said:

I had a read it seems that it applies to me in my case as wasn't to a partner , was over £250, gifts over £3000 and anything where deceased didn't receive full value in exchange.

So seems I have to fill in 403 but I'm answering no to most things . I think they trying to determine if the gift has a reservation but there's no clear way for them to determine this.

The gift was subject to the 7 year rule so it is exempt. Had it remained a GWR you would have to declare it. 

V2001

Keep_pedalling said:

V2001 said:

I had a read it seems that it applies to me in my case as wasn't to a partner , was over £250, gifts over £3000 and anything where deceased didn't receive full value in exchange.

So seems I have to fill in 403 but I'm answering no to most things . I think they trying to determine if the gift has a reservation but there's no clear way for them to determine this.

The gift was subject to the 7 year rule so it is exempt. Had it remained a GWR you would have to declare it. 

Yea agree with you. But the form asks about any gifts after 1986 which then leads to the death with in 7 years, and reservation of benefit questions. None of which deceased fell into.

V2001

Ok seems like I made some typos in date,  so I write this out again with detail

Father gifts house to son in 2010. They are now both joint owners and live together. We assume this is a GWR.
In 2015 house is valued at 550k. Son buys out father's half share for 275k, and Father uses that money and savings to buy a house for himself at 665k and moves out. Son lives at existing property. 

In 2024 Father passes away.  Question 30 on iht400 asks did they make any lifetime transfers of value after 1986. Do I say yes or no given the above?
If i say yes on I fill in iht403 . But in iht 403 no gifts made within 7 years of death so this doesn't apply to me. Also there's no reservation of benefit for me to fill out...

Keep_pedalling

V2001 said:

Ok seems like I made some typos in date,  so I write this out again with detail

Father gifts house to son in 2010. They are now both joint owners and live together. We assume this is a GWR.
In 2015 house is valued at 550k. Son buys out father's half share for 275k, and Father uses that money and savings to buy a house for himself at 665k and moves out. Son lives at existing property. 

In 2024 Father passes away.  Question 30 on iht400 asks did they make any lifetime transfers of value after 1986. Do I say yes or no given the above?
If i say yes on I fill in iht403 . But in iht 403 no gifts made within 7 years of death so this doesn't apply to me. Also there's no reservation of benefit for me to fill out...

As the son was living with his father at the time of the gift I don’t believe it is classed as a GWR in the first place, but even if it was it stopped being one in 2015.

The wording on IHT400 is not exactly very clear but it does force you to attempt to fill in IHT403, but as you have discovered you have nothing to declare on it. Some gifts older than 7 years would still be classed as lifetime transfers and subject to IHT but this one is not. You can safely answer no on IHT400 and not fill in 403. 

HMRC only penalise you if you fail to declare taxable assets or gifts.