Lease Carve Out on Home

[fabiusmaximus]

Is it still possible to make a sale of a family home to a third party, while keeping a 'lease carve out' to maintain residence for the next few years, thereby releasing the equity in the home?

Many thanks

[AGoodman]

Yes, it's always been possible if you are selling for full value.
The difficulties are (a) finding a third party willing to buy in those circumstances and (b) what to do if circumstances change or you outlive your retained interest.

[fabiusmaximus]

Would this kind of setup function to release equity specifically for the purposes of reducing the IHT on an estate? Some recent advice I've found online indicates that this cannot be achieved with a carved out lease, only with a non-obligatory 'license to occupy'.

Thanks for your help, A.

[AGoodman]

It turns on the details and what you do with the proceeds. If there is an arrangement that you will give the proceeds back to the buyer then it could be challenged.

This whole area is fraught if using it for tax planning (ie you give away the proceeds) and/or you are connected with the buyer. Leave carve outs can go wrong and HMRC are open to challenging them. You would have to take proper advice from somebody who has the full picture and invest the fees to make sure it is done correctly.