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Where Taxpayers and Advisers Meet

Gifting property and GROB

vik2001
Posts: 27
Joined: Sat Nov 17, 2012 2:24 am

Gifting property and GROB

Postby vik2001 » Sun Jan 12, 2020 7:18 pm

Mother and son have always lived in property together. In 2016 mother adds son to deeds so they are both joint tenants. So this is a gift as no money exchanged. There is no mortgage on property.
To avoid GROB as joint tenants do they both own 50/50 shares or should they have been tenants in common as 50/50 in order to reduce IHT. Or does it not matter which tenancy they have in land registry. Im wondering if being joint tenants was a mistake in order to avoid grob, should it have been tenants in common?

Also what happens if son dies before mother in the above case?

Also if after 7 years have passed can they sell the property which is their main residence and move into new place and live together with an additional family member as joint tenants? Will the gift in this case carry on?

maths
Posts: 7638
Joined: Wed Aug 06, 2008 3:25 pm

Re: Gifting property and GROB

Postby maths » Mon Jan 13, 2020 4:08 pm

2016 gift a PET and a GWR (unless mother and son share expenses or mother pays son rent).

Immaterial as to whether beneficial ownership joint tenants or tenants in common.

If son dies (assuming previously expenses shared/rent paid ie no GWR) then the gift once again becomes a GWR for mother; unless she pays rent.

On sale followed by a joint purchase GWR may still apply unless expenses shared/rent paid.

vik2001
Posts: 27
Joined: Sat Nov 17, 2012 2:24 am

Re: Gifting property and GROB

Postby vik2001 » Mon Jan 13, 2020 4:48 pm

Would a POAT be payable if they sold the house to move into a larger house?

maths
Posts: 7638
Joined: Wed Aug 06, 2008 3:25 pm

Re: Gifting property and GROB

Postby maths » Mon Jan 13, 2020 8:28 pm

If the GWR provisions do not apply on the new purchase because of expense sharing/rent payments, POAT is not in point.

POAT. is designed to apply where the GWR provisions are circumnavigated.

vik2001
Posts: 27
Joined: Sat Nov 17, 2012 2:24 am

Re: Gifting property and GROB

Postby vik2001 » Mon Jan 13, 2020 10:18 pm

But would PoAT apply because the previous property was sold which was a gift. I then would have got half and the other owner half the proceeds. Even if we using this to buy a new property and adding money on top

I got this from taxweb site: if you still use something you have given away or sold for less than its full value at any time since 18 March 1986 and the gift is not caught by the gift with reservation rules it may from 6 April 2005 be caught instead by the pre-owned assets tax (POAT). The tax may also apply to something you use which belongs to someone to whom you made a cash gift in the last seven years.

Still not sure if selling and moving into a new place with mother avoids POAT. Any further clarification most appreciated as its such a grey area.


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