property transfer

pookie

dear all...
my aunt and uncle live overseas and have been trying to sell their house over here for ages, with little success in the current housing market (despite trying the suggestions on this website). they are now thinking of gifting the house to my brother, as he has started work and needs somewhere to live (they have no children of their own). can they do this easily? are there restrictions?
any knowledge in this field would be greatly appreciated

Han_naH

Inheritance tax is levied on estates starting at something like £260,000.

To my knowledge, they can do this as long as they don't die within 7 years. If they do, the gift is deemed an exercise in trying to avoid inheritance tax, at 40%.
This tax then becomes payable.

Have you not considered keeping the property and renting it, possibly to their relation?

Then you can sell when the market improves.

lickrish

Wh-ow-ow-ow Leejp

If Aunt & Uncle are deemed as having UK ‘domicile’ (even tho’ they may reside overseas) and do transfer their property to worthy nephew, yes it would be deemed as a Potentially Exempt Transfer (PET) (under (IHT) Inheritance Tax rules) however you’ve omitted to tell our readers about ‘Tapering Relief’

As I understand it, if Aunt & Uncle survive a full three years from the date of transfer, their estate would benefit from 20% relief (of the value of the gift) in year 4, then a further 20% relief in year 5 and so on, until after the end of year 7 when (in year 8) the full value of the gift would be washed out of their individual estates.

Hope this helps
8)

pookie

thanks for this guys. unfortunately i don't think aunt and uncle are stated as being domiciliary in the UK, so i don't know whether this changes anything. also, erm..what does 20% relief on their estate mean?

boringoldfart

I'm not a financial advisor or solicitor so will not get into those areas but to understand the practical process your best bet for gifted transfer is to go to http://www.landregistry.gov.uk/default.asp
Select Office finder under Customer Service tab.
Find the office that is likely to service your Aunt and Uncles home and talk to the relevant customer information centre staff. They will send you the appropriate forms and guidance as to how to complete. Hope this is not too late to help.