Gifts to connected person who previously purchased house

[bill on line]

Parents sell there home to son for full market price, a transaction between connected people. This is the only property their son owns. The parents come to stay in what is now their sons home for 6 months a year. As there has not been any transfer of value for IHT there is no problem with GWR or POAT.

However if the parents were to make subsequent PET gifts to there son which were not pre-planned at the time of the house sale would potential GWR or POAT issues arise (due to the parents use of their former home)?

I think the GWR by associated operations should not apply as the Parents and Son can claim/“Prove” there were two completely independent transactions which were not preplanned(they could be separated by number of years) the house sale and then the subsequent PET for IHT planning.

However is there a potential POAT issue for any PET gifts from parents to son?

Would the type of gift eg cash and the use it is put to make any difference with regards to POAT if it applies. For example the cash may be put in an account which the parents never benefit from directly or indirectly

Iain

[bob.fraser@towrylaw.]

How would the son raise the cash to pay for the home? Would he raise a loan/mortgage?
When the parents make the subsequent PET, would it be used to clear the loan/mortgage?

POAT will only arise from a cash gift if, within 7 years of making the gift, the donor benefits from the gift.

[bill on line]

Bob

The son would be using mortgage to pay for the purchase of the parents home.

The parents would say at there former home within seven years of cash gifts PET.

The cash PET would not be used clear the mortgage or benefit the parents directly or indirectly in the hope avoiding potential POAT issues would this arrangement be effective

Iain