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Where Taxpayers and Advisers Meet

Giving house back

Nicklam
Posts: 11
Joined: Sun Jan 19, 2020 1:00 am

Giving house back

Postby Nicklam » Sat Mar 21, 2020 9:03 am

Ive searched the forum but cant find any info that relates to these circumstances.
6 years ago father gifted property to me and we both stayed there. I believe this was grob as he stayed there.

I want to move out now and travel. Can i transfer the property back to him and leave. Will this get rid of grob he has and cause him no further iht issues. If everything is back in his estate it cant be a grob right? Nor could it be a poat charge?

maths
Posts: 7796
Joined: Wed Aug 06, 2008 3:25 pm

Re: Giving house back

Postby maths » Sat Mar 21, 2020 7:28 pm

The gift by father constituted a gift with reservation (GWR). If father had gifted less than 100% and you had both contributed to household expenses it would not have constituted a GWR.
However, this is now academic.

If you gift 100% back to father then his original gift will no longer qualify as a GWR but father will as a c consequence be deemed to have made a PET. This in practical terms will have no import because, as you say, the house will fall back within father's estate for IHT.

You will have made a PET but as you will no longer live there it will not constitute a GWR.

Nicklam
Posts: 11
Joined: Sun Jan 19, 2020 1:00 am

Re: Giving house back

Postby Nicklam » Sat Mar 21, 2020 8:42 pm

Cheers maths.
If father was to sell the house say in a few years time and buy elsewhere would he be exempt from any cgt even after he made a transfer to me a few years back. It has been his only residence even after his gift to me.

I obviously now will be gifting the whole thing back.

maths
Posts: 7796
Joined: Wed Aug 06, 2008 3:25 pm

Re: Giving house back

Postby maths » Sat Mar 21, 2020 11:32 pm

You acquired your 100% interest and since your acquired ownership you have lived in the property. When you gift back to father there will be no CGT charge on your part.

Your father will be deemed to have acquired the property from you at its market value. If he lives in it until he sells it he will have no CGT to pay.

I would suggest you take formal advice based on all the facts before taking any action.

Nicklam
Posts: 11
Joined: Sun Jan 19, 2020 1:00 am

Re: Giving house back

Postby Nicklam » Sun Mar 22, 2020 10:40 pm

Father still has a beneficial interest in the property as he was still on the deeds. So possible grob..
If we sold and moved on our own ways does the grob end for him or continue to his new property?

maths
Posts: 7796
Joined: Wed Aug 06, 2008 3:25 pm

Re: Giving house back

Postby maths » Mon Mar 23, 2020 2:24 pm

The fact that father is "on the deeds" does not mean he still possesses a beneficial interest in the property.

The only way to find out is check with Land Registry or the solicitors acting at the time.

In general if father gifted the property he would typically no longer retain a beneficial interest.

Nicklam
Posts: 11
Joined: Sun Jan 19, 2020 1:00 am

Re: Giving house back

Postby Nicklam » Mon Mar 23, 2020 3:17 pm

So if he had no beneficial interest but was on L.R does that mean no Grob can ever exist?

maths
Posts: 7796
Joined: Wed Aug 06, 2008 3:25 pm

Re: Giving house back

Postby maths » Mon Mar 23, 2020 7:05 pm

I think there may some misunderstandsing.

1. Father owned 100% of the property.

2. Father gifted 100% to son.

3. The reference to "gift" is a reference to a gift of the "beneficial" interest (whether or not the legal title changes).

4. Father owned 0% of the beneficial interest after his gift.

5. The gift was a GWR.

6. If you gift your beneficial interest as to 100% back to father at the time of moving out his GWR terminates and you have made a PET.

Nicklam
Posts: 11
Joined: Sun Jan 19, 2020 1:00 am

Re: Giving house back

Postby Nicklam » Mon Mar 23, 2020 8:15 pm

Ok so in regards to your point 6. A 7 year pet starts for md but no pet for father when the gift is released back to him?

maths
Posts: 7796
Joined: Wed Aug 06, 2008 3:25 pm

Re: Giving house back

Postby maths » Mon Mar 23, 2020 9:12 pm

Yes 7 years starts for you.

Re your father I commented in my earlier post:

"If you gift 100% back to father then his original gift will no longer qualify as a GWR but father will as a consequence be deemed to have made a PET. This in practical terms will have no import because, as you say, the house will fall back within father's estate for IHT."


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