Poat or not?

[Bill31]

Hi
Please advise if following can cause a Poat issue.

I live at home with father. In 2016 he gifted me part of the property we live in together. He pays 70% of household bills/expenses. But also before and after the signing of the house the following happened:

In 2014 he gave me a 30k gift of cash. Also in addition he gave me a 35k interest free loan which was documented and signed by both of us.
In 2015 i paid the 35k loan back to him in full.

In 2016, 2 months before the house was put in joint names i gave him 4k cash as reimbursement of some expenses. Then 1-2 months later he signed half house into my name. Could this be Poat?

In 2017 i gave him 20k loan. Father paid this 20k back to me in full in 2018.
In 2019 he gave me a interest free loan of 30k which i paid back in full within 6 months. So all loans are clear now

Now in 2020/21 we want to move house as im getting married so we need a bigger place. Father will be living with me also and the wife. How do we structure the move so it does not trigger any POAT charges, can the money loaned between us, or his 30k cash gift in 2014 to me trigger a Poat charge if we moved and become joint tenants in the new house?

I would appreciate peoples input into this.
Thanks so much.

[Bill31]

If anyone could advise. Could the 30k gift in 2014 to me by father trigger a Poat charge if i used that 30k towards the purchase of a new property? Do i need to wait 7 years before using this towards the purchase of a new property?
Me and father will own the new property as tenants in common.

[pawncob]

Firstly, the loans are not relevant as they've all been documented and repaid.
Reimbursement of expenses- not relevant. It is just what you say it is.
2014 gift falls out of account in 2021.
If you document the purchase of the new property and specify ownership share, no POAT arises.

[Bill31]

Thanks pawncob.
Should we be waiting till 2021 before we purchase the new property, as that way the 30k cash gift will fall out of father estate, being 7 years then? And there can not be any question of his money being used that to contribute towards my share of new house.

Document purchase of property and document ownership share you mean through land registry or trust deed through solictor?

[Bill31]

Also does the gift he made in 2016 of the current house follow us into the purchase of a new house between house??
Current house is 500k. New house will be around 800k. So we have to contribute another 150k each to hold it as TIC equal shares

[vik2001]

The loans if documented properly with evidence of bank statements is fine and can be ruled out.
Like pawncob said reimbursements not important its what you say it is.

The main issue seems to be the £30K your father gave you. Arguably that could give rise to POAT. However this is the sort of situation the legislation was not particularly intended to catch and so there is a relatively generous ‘de minimus’ exemption. Under the POAT rules someone has to pay an income tax charge on an imputed ‘rental value’ for their property. However if the imputed rental charge is less than £5,000 per annum then no POAT is charged.

Suppose your new property costs £600,000 and could be rented out for £2,000 per month (£24,000 per annum), £30,000 represents 5% of £600,000 so POAT would be based on a rental charge of £1,200 per annum, that is much less than the £5,000 ‘de minimus’ threshold so POAT does not have to be paid.

Also like you said if you wait till the full 7 years is over before you purchase the new property POAT will not apply.
Get proper written advice also before you do anything

[Bill31]

Ta.
So just to ask again for confirmation if you wait 7 years after a gift cash by donor to donee , before that is used for the proceeds of a new house by the donee, poat is exempt?

[vik2001]

If the period between the gift of cash and occupation exceeds 7 years then no poat. Less than 7 years between gift and occupation equals poat. So to play it safe i would wait till after 2021 before you move, and make sure your share reflects your contribution and same for father.
However maybe a more experienced member may want to confirm what i said is correct.