Postby AGoodman » Mon Jan 21, 2019 11:46 am
I'm afraid this is a no no for tax planning. Yes, ti is a reservation of benefit but no, it doesn't help.
The house will be subject to a reservation of benefit, so included in grandmother's estate for IHT. I'm afraid it also means that your grandmother's estate will not benefit from the residential nil rate band. This may not be a problem if grandmother's estate (including the house) is below the nil rate band (which could be £650k if she was a widow and grandfather left everything to her).
As your father has been the owner of the house since the gift then, if he sells, his gain would be calculated against the market value 25 years ago.
There is a tax free uplift on death for CGT but it does not apply where the deceased did not actually own the property when they died.