This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

House Ownership vs IHT

Posts: 61
Joined: Wed Oct 11, 2017 1:53 pm

House Ownership vs IHT

Postby Jason123456 » Wed Sep 11, 2019 3:29 pm

My wife and I own our Residence as Tenant in Common.....if we were to include our two sons as part owners, four owners each with 25% share,....if the sole purpose was to reduce future IHT that previously would normally be due.
I understand that if a rent is payed to my two sons to cover us living in a property that is part owned by them, some IHT can be this correct?....and if so how would it be legally managed?

Posts: 951
Joined: Fri May 16, 2014 3:47 pm

Re: House Ownership vs IHT

Postby AGoodman » Wed Sep 11, 2019 4:51 pm

If you transferred a share to your sons, the share transferred could fall out of IHT in 7 years time (up until then it probably won't make any difference).

You would need to transfer the share and pay them a proportion of the full market rent equivalent to their share.

The position maybe better if they live with you but I presume not.

You could transfer the legal title or get a lawyer to draw up a deed of assignment to just assign the beneficial interest. You should make it clear in writing that the payments are rent and your sons would have to pay income tax on the rent.

Obviously there are costs (including income tax) and risks (sons' divorce or bankruptcy). Also, bear in mind that your sons will have to pay 18/28% CGT on the increase in the value of the property between the gift and any sale. If you died within 7 years, the position could be worse (IHT + CGT + income tax for the intervening period).

Posts: 61
Joined: Wed Oct 11, 2017 1:53 pm

Re: House Ownership vs IHT

Postby Jason123456 » Wed Sep 11, 2019 5:06 pm

Thank you, AGoodman......most helpful!

Posts: 5
Joined: Tue Oct 15, 2019 7:47 am

Re: House Ownership vs IHT

Postby denaro » Tue Oct 15, 2019 8:05 am

Hi Jaon. what was the outcome

Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”