gifting to parents

[faisalm33@yahoo.co.u]

i have sold my house for £80,000 which i have lived in for 9 yrs until buying a second home which i moved into last year (nov 03).

i will now like to give my parents the £80,000
to buy a retirement home they still will keep their present home in london.

what tax will i/they have to pay if any?

[ian.wright@beechams.]

You will not have to pay any tax or cgt on the transfer nor will your parents on receipt of the cash gift.

In inheritance tax rules, if you die within 7 years of the gift, all or part of the gift will fall back into your estate, this is known as a potentially exempt transfer.

The property will now form part of your parents estates and depending on the level of assets they have, more IHT will be payble on their deaths.

There is another problem too in that your parents can only have one principal private residence to mitigate capital gains tax upon sale of a property.

If after three years of moving out of thier home they then sell it then capital gains tax will become payable. The longer after 3 years, the worse the CGT will get. If it is rented out then some further relief may be available when they sell.

Maybe you should all seek specialist tax advice on the most tax efficient ways to deal with these transactions.