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Where Taxpayers and Advisers Meet

Iht and gifting question

vik2001
Posts:77
Joined:Sat Nov 17, 2012 2:24 am
Iht and gifting question

Postby vik2001 » Tue Jul 02, 2024 6:06 pm

Father gifts half share of house to son. This is a gwr as it did not meet sharing rules.

4 years later son buys father's half share in house at slightly above market value, and now owns it fully. Father moves out and purchases his own house.

17 years later Father passes away. Does the above gift of half share need to be declared anywhere in iht403 forms? And is any IHT due? can full RNRB be claimed on Father's property by the son.

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: Iht and gifting question

Postby maths » Tue Jul 02, 2024 11:02 pm

"The gift by father of 50% of his house to his son is a PET and is a gift with reservation. However, 4 years later father moves out in which was father no longer has reserved a benefit in the house. On father's death the PET does not form part of his estate (as he survived 7 years after the 50% gift) and similarly re the gift with reservation.

So no need for any declarations to be made by father's executors and no IHT arises from the PET and gift with reservation.

At his death the father's original property is held as to 100% by the son; no part of it is left in father's will to son. Father owns a new property which he purchased.

Has father made a will in which case to whom did he leave the property in which he was living at the date of his death. What was date of father's death?

What were the values of father's first house and his second house?

vik2001
Posts:77
Joined:Sat Nov 17, 2012 2:24 am

Re: Iht and gifting question

Postby vik2001 » Wed Jul 03, 2024 6:40 am

Ok so in the iht400 form we put NO to any lifetime gifts made after 1986? Because then it refers to form iht 403, in which no gifts were made 7 years before death, and there was no reservation.

The value of the first house was 550k. Son bought thr remaining share of father for 275k which he then owned outright.
Father's new house was bought for 665k which he lived in till death. In will this property is left to the 2nd son.

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: Iht and gifting question

Postby maths » Wed Jul 03, 2024 11:04 pm

You provide no dates inn your post. Either your father did or did not make gifts after 1986.

Your father's estate would be entitled to a RNRB in respect of the property he lived in at his death.

vik2001
Posts:77
Joined:Sat Nov 17, 2012 2:24 am

Re: Iht and gifting question

Postby vik2001 » Thu Jul 04, 2024 9:35 am

Father gifts house to son in 2010. They are now both joint owners and live together. We assume this is a GWR.
In 2015 house is valued at 550k. Son buys out father's half share for 275k, and Father uses that money and savings to buy a house for himself at 665k and moves out. Son lives at existing property.

In 2024 Father passes away. Question 30 on iht400 asks did they make any lifetime transfers of value after 1986. Do I say yes or no given the above?
If i say yes on I fill in iht403 . But in iht 403 no gifts made within 7 years of death so this doesn't apply to me. Also there's no reservation of benefit for me to fill out...

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: Iht and gifting question

Postby maths » Thu Jul 04, 2024 4:35 pm

A gift by father was made in 2010; so "yes" to Q30.

Then complete IHT403 (eg Q8 on IHT 403, for example, needs completing).

Not sure Excepted Estate Regs apply which if they did would mean no need to file .

vik2001
Posts:77
Joined:Sat Nov 17, 2012 2:24 am

Re: Iht and gifting question

Postby vik2001 » Thu Jul 04, 2024 8:18 pm

Thanks maths . It's confusing as if I answer yes to q8 I'm saying it's a gift with reservation. But this is clearly not the case as father moved out and survived a further 7 years.

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: Iht and gifting question

Postby maths » Thu Jul 04, 2024 8:57 pm

HMRC may raise questions but it will become clear to them that what was initially a gift with reservation ceased as and when father moved out.

vik2001
Posts:77
Joined:Sat Nov 17, 2012 2:24 am

Re: Iht and gifting question

Postby vik2001 » Thu Jul 04, 2024 9:31 pm

What will happen if I just put NO in box30 to no lifetime gifts made in iht400? Just seems I'm filling out a blank iht403 which is causing me stress to get right as it makes no sense.

I rang the IHT helpline and thr said to out no as there's no reservation and its past 7 years of death. I'm just worried by putting NO I will get into trouble, even when there's no tax due

maths
Posts:8527
Joined:Wed Aug 06, 2008 3:25 pm

Re: Iht and gifting question

Postby maths » Sat Jul 06, 2024 5:11 pm

My answers remain as above.


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