This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Reducing IHT by Transferring from Sole to joint tennant ownership

shmoo
Posts:9
Joined:Sun Feb 26, 2017 5:59 pm
Re: Reducing IHT by Transferring from Sole to joint tennant ownership

Postby shmoo » Wed Mar 15, 2017 9:53 am

Also bear in mind that your brother is exposed in full to CGT from the date of transfer as he would not be entitled to PPR relief.
This contradicts an earlier response on this thread, where I was informed that:
Is there any capital gains tax on me or my brother when dad transfers ownership of each property to a joint tennant arrangement?

No. Any CGT charge will be on father.
Please can you clarify. I was under the impression that a gift from dad to son would not incur CGT for son, but only for dad.

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: Reducing IHT by Transferring from Sole to joint tennant ownership

Postby AnthonyR » Wed Mar 15, 2017 10:14 am

There is no CGT charge on your brother when your dad transfers it to him.

However, the property belongs to your brother from that point onwards, so if it is sold in future any growth is subject to CGT on your brother as he doesn't live there so wouldn't benefit from PPR. Effectively you are swapping IHT at 40% for CGT at 28% on any future growth.

The danger is if your father dies within 7 years, or retains a benefit (ie stops paying rent at any point in future) the family is then subject to both IHT and CGT on the property.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

shmoo
Posts:9
Joined:Sun Feb 26, 2017 5:59 pm

Re: Reducing IHT by Transferring from Sole to joint tennant ownership

Postby shmoo » Mon Mar 20, 2017 2:55 pm

Say dad fully transfers the property to my brother and also pays a monthly rental to him.

What would happen with regards to dad's IHT allowance should my dad pass within the 7 year period after transfer to my brother?

Since, dad has passed inside the 7 year period, IHT would be liable on his estate. This would include the house he transferred to my brother.

Would dad still have the full £650k IHT tax allowance or would that not apply on the property he transferred to my brother?


Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”