TAPER RELIEF

[gregory10]

Hi

Could someone please help.

If a house is transferred 50:50 and did not have a mortgage (Rent was not exchanged) but the bills were shared is it still a gift?

Also if the house was transferred less than 7 years ago assuming the value of 50% was about £200k (so less than the nil band).....would you get taper relief on death as the total estate will be about £700k

Thanks
Greg

[Peter D]

It depends on the relationship of the two parties that own the prtoperty. You need to explain as my crystal ball is in for a service. Regards Peter

[gregory10]

its a father son relationship but father has recently passed away.

[Lee Young]

It is a still a gift and remains in the donor's estate for 7 years.

Taper relief would only apply if the gift itself gave rise to IHT on death within 7 years. Assuming it is valued within the nil rate band, and there are no other prior caught gifts then the gift uses up part of the nil rate band and no IHT technically arises on it and therefore there is nothing to taper. Taper relief applies to the tax charged on the gift, not to the value of the gift itself.

[gregory10]

hi

Just a quick questions whats the best way to get a valuation for your property for IHT purposes?

Is estate agents acceptable? what about when the gift was made back in 2004

greg

[Lee Young]

Use a chartered surveyor.

[gregory10]

thanks

does it matter if its a GWOB or just a gift.....the 50% transfer of the house as they both get included in the estate at 50%....right??

Does the HMC look at all returns in detail or would they just check random ones? Do you need to send valuations and statements with the IHT return

Thanks
Greg

[Lee Young]

They look at them all, it does matter whether its a PET or a GRO|B as they go in different parts of the return and yes you will need to send the valuations.

[gregory10]

i thought due to volume they may not check each one!

But how can you decide whether it’s a GWOB or a PET because he didn’t give away 100% and retain the whole benefit but only gave 50% away and shared bills….but no rent paid as there was no mortgage? Who decides?

Also is it true you can get a 10-15% discount off the valuation of a property if you are only valuing 50% rather than as a whole

Thanks

[Lee Young]

He gave away half therefore half is in his estate and half is deemed to be in his estate because of the rules. Discount is available for joint onwership.