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Where Taxpayers and Advisers Meet

Taxation on Gifts

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Sat May 06, 2006 9:04 am

My son wants to give his partners grand father a gift of 30,000 to allow him to but his council house. The grand father (90 years of age) is going to leave the house to her in his will. No IHT applicable. Whilst I appreciate there will be CGT on the house should she sell it if she does not live in it for at least 12 month is there any tax due on my son's gift of £30K. Regards Peter

iandouglas
Posts:117
Joined:Wed Aug 06, 2008 3:31 pm

Postby iandouglas » Sat May 06, 2006 9:07 am

Your understanding is good. There are no tax implications on cash gifts other than the IHT one you know about unless of course your son dies within 7 years of the gift!

Ian Douglas - County Wills - 0871 2220981

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Sat May 06, 2006 9:13 am

Now that's an impressive response time at 1813hrs on a Saturday. 10 out of 10. Ian. Regards Peter

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Sun May 07, 2006 1:03 am

I am not certain about the gift aspect.

Why not an interest free loan?

What happens if the Will is changed/invalid/challenged?

I would recommend professional advice and cast-iron paperwork.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Sun May 07, 2006 3:58 am

Further to this, as the Grand Father is living 'rent free' in the property I assume the owner will be liable for income tax on the percieved value of the rent. Is this correct. Regards Peter

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Sun May 07, 2006 4:08 am

But is he?

If he owns the house, he is not renting it - unless it is intended to split the legal and beneficial interests.

This is why it is important to understand the precise nature of the transction.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Sun May 07, 2006 4:19 am

The house is going to be purchased from a council selling scheme by his grand daughter and Grandad who already rents the property from the council will be staying there but now rent free thus the issue about tax. Regards Peter

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Sun May 07, 2006 4:40 am

I am still unclear.

If the grandfather does not own the house, how can leave it to anyone in his Will? Or is intended that he will only be a part owner?

If it is a gift, it will be a PET.

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Postby Peter D » Sun May 07, 2006 5:43 am

Sorry for the confusion. There are two options 1/. my son lends his partner the money to buy the council house that grandad is pesently living in and grandad stays there rent free, and 2/. my son lends the money to Grandad and ne buys it and leaves it in his will to his grand daughter or my son. IHT not an issue but but IT will be if he does not own it stays rent free. Regards Peter

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Postby King_Maker » Thu May 11, 2006 11:32 pm

It seems to me that the best option is still a Loan, with the house being bequeathed to your son's partner and/or him in the grandfather's Will. IIRC, the Court's have upheld such an arrangement.


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