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Where Taxpayers and Advisers Meet

GROB - with multiple owners

lotrttt
Posts:3
Joined:Fri Jan 22, 2021 11:18 am
GROB - with multiple owners

Postby lotrttt » Tue Mar 16, 2021 5:22 pm

Hi, my FIL owned the main family residence outright, and has gifted it to his wife and 3 kids, with each of them holding 25%. He now lives there with the wife, but none of the kids live there.

Does he have to pay full rent to stay there to avoid a GROB?

Or 75% to the 3 kids and not to the wife because she lives there?

Or 50%, for...some reason?

Thanks

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: GROB - with multiple owners

Postby maths » Tue Mar 16, 2021 9:22 pm

Probably not the best thing to have done from the tax perspective.

The gift is classified as a gift with reservation and thus on his death the house is treated as part of his estate for IHT unless, for example, he pays market rent to stay there (such rent taxable on the recipients). Rent would I think be for occupation of the full house.

On any future sale any capital gain would be subject to CGT on the children' parts as they don't live there.

No uplift for CGT on his death.

lotrttt
Posts:3
Joined:Fri Jan 22, 2021 11:18 am

Re: GROB - with multiple owners

Postby lotrttt » Wed Mar 17, 2021 11:20 am

Probably not the best thing to have done from the tax perspective.
Yup. He wasn't meant to be living there after the gift, but circumstances changed unfortunately.
The gift is classified as a gift with reservation and thus on his death the house is treated as part of his estate for IHT unless, for example, he pays market rent to stay there (such rent taxable on the recipients). Rent would I think be for occupation of the full house.
I understand that he has to pay market rent to avoid the gift with reservation of benefit. My main confusion is that his wife is a 25% owner and also lives there. "Rent would I think be for occupation of the full house." - are you saying that he has to pay the full rent on the house to the owners (regardless of who they are or where they are)?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: GROB - with multiple owners

Postby maths » Wed Mar 17, 2021 12:14 pm

Apologies. The GWR provisions do not apply to inter spouse gifts. Thus the 25% gift to wife is simply exempt but not the balancing 75.%. Rent would need to be 75% of mkt.


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