7 year rule for IHT

makemineapint

Hi all, 
Again I need some clarification about gifting a house and 7 yr rule for IHT.
So we have gifted our house ( previous threads deal with cgt, and down sizing etc), to our son as his main home. We signed and dated the tr1,ap1 and deed of gift and sent these together with id1 forms to Land registry They have emailed giving a 4 month timescale to update their side.
So my question is when does the 7 Yr rule officially start: the date that the documents are signed or the date that it's registered with Land Registry. I am thinking it's the latter and on the side of caution.
I am aware it's tapered after 3years, and 4 months at the end of the 7 years is probabaly not going to make a lot of difference but just wondered if anyone had any definitive answers. 
Thanks

user1977

makemineapint said:

when does the 7 Yr rule officially start: the date that the documents are signed or the date that it's registered with Land Registry. I am thinking it's the latter 

Why? If you were buying a house you own it from the date of completion, it doesn't matter how long the LR take to process it. Same principle here.

makemineapint

user1977 said:

makemineapint said:

when does the 7 Yr rule officially start: the date that the documents are signed or the date that it's registered with Land Registry. I am thinking it's the latter 

Why? If you were buying a house you own it from the date of completion, it doesn't matter how long the LR take to process it. Same principle here.

Thanks that's helpful.

Olinda99

ensure you fully understand the taper rules

Keep_pedalling

Olinda99 said:

ensure you fully understand the taper rules

They don’t apply in this case as the house is valued at £600k so neither of them will be gifting over their NRB, (assuming they have equal ownership.)

Keep_pedalling

You are gifting the house and moving out, if you move out after gifting the house the 7 year clock will not start until you move out and it is no longer your permanent residence. Up to that point you will be maintaining a beneficial interest. 

theartfullodger

But when end date ?? Depends on rules/law over IHT - which may well change ove the up-coming years (e.g. 7 years could be reduced to 4 years 01/02/2026.... 

The country is going to need more tax income, Trump etc etc, IHT an easy target...

Albermarle

theartfullodger said:

But when end date ?? Depends on rules/law over IHT - which may well change ove the up-coming years (e.g. 7 years could be reduced to 4 years 01/02/2026.... 

The country is going to need more tax income, Trump etc etc, IHT an easy target...

More likely to be extended to 10 years I would think, as that would potentially bring more money in.

OP - Tapering only applies where a gift is more than your NRB, and only to the amount above it.
So if the gift from you ( half of the value of the house) is less than £325K, then no taper will apply and if you die after 6 years and 11 months , a 100% of the gift will be counted back into your estate.

makemineapint

Albermarle said:

theartfullodger said:

But when end date ?? Depends on rules/law over IHT - which may well change ove the up-coming years (e.g. 7 years could be reduced to 4 years 01/02/2026.... 

The country is going to need more tax income, Trump etc etc, IHT an easy target...

More likely to be extended to 10 years I would think, as that would potentially bring more money in.

OP - Tapering only applies where a gift is more than your NRB, and only to the amount above it.
So if the gift from you ( half of the value of the house) is less than £325K, then no taper will apply and if you die after 6 years and 11 months , a 100% of the gift will be counted back into your estate.

We had better live for more than 7 years then lol, just so much involved In trying to help your kids..hopefully the IHT threshold will still be above£325k for each of us. 

Albermarle

makemineapint said:

Albermarle said:

theartfullodger said:

But when end date ?? Depends on rules/law over IHT - which may well change ove the up-coming years (e.g. 7 years could be reduced to 4 years 01/02/2026.... 

The country is going to need more tax income, Trump etc etc, IHT an easy target...

More likely to be extended to 10 years I would think, as that would potentially bring more money in.

OP - Tapering only applies where a gift is more than your NRB, and only to the amount above it.
So if the gift from you ( half of the value of the house) is less than £325K, then no taper will apply and if you die after 6 years and 11 months , a 100% of the gift will be counted back into your estate.

We had better live for more than 7 years then lol, just so much involved In trying to help your kids. hopefully the IHT threshold will still be above£325k for each of us. 

Helping your kids is easy ( if you have the money) . However most tax avoidance is inevitably not made so easy. 

makemineapint

Thank you all for your very valuable contributions. So glad that advice from forum users is thoughful and informative