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Where Taxpayers and Advisers Meet

Gifts with reservation

Collin41
Posts:2
Joined:Sun Oct 31, 2021 10:49 pm
Gifts with reservation

Postby Collin41 » Sun Oct 31, 2021 11:18 pm

My aunt lived with my grandfather (her father) until his death a few weeks ago. She started living with him after his divorce about 15 years ago. My grandfather owned his home until 4 years ago when he transferred the house to my aunt. After the transfer, he lived continually in the house. His original intention was to leave the house but 2 weeks after the transfer he had a heart attack and was admitted to hospital. After his discharge, his health deteriorated until he was placed on end of life care, but still lived with my aunt who cared for him. The house is worth about £650,000. The questions she's asked me are about her inheritance tax liability. Unfortunately, my knowledge is very limited.

I believe there is an exemption for infirm former owners to live in the house they once owned. But, the problem I see is that he never left the house.

I've looked at deeds of variation but would this apply to transfers before someone's death?

thank you

Collin41
Posts:2
Joined:Sun Oct 31, 2021 10:49 pm

Re: Gifts with reservation

Postby Collin41 » Mon Nov 01, 2021 11:02 am

My aunt lived with my grandfather (her father) until his death a few weeks ago. She started living with him after his divorce about 15 years ago. My grandfather owned his home until 4 years ago when he transferred the house to my aunt. After the transfer, he lived continually in the house. His original intention was to leave the house but 2 weeks after the transfer he had a heart attack and was admitted to hospital. After his discharge, his health deteriorated until he was placed on end of life care, but still lived with my aunt who cared for him. The house is worth about £650,000. The questions she's asked me are about her inheritance tax liability. Unfortunately, my knowledge is very limited.

I believe there is an exemption for infirm former owners to live in the house they once owned. But, the problem I see is that he never left the house.

I've looked at deeds of variation but would this apply to transfers before someone's death?

thank you
I can't edit my post, so have to post corrections here. My aunt started living with my grandfather after her divorce, not his divorce. He was estranged from his wife and they never divorced.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Gifts with reservation

Postby pawncob » Mon Nov 01, 2021 5:07 pm

Assuming it was his PPR, no CGT on transfer to your aunt.
Gift to your aunt is chargeable to IHT, with some time apportioned reduction as it was 4 years ago.
With a pinch of salt take what I say, but don't exceed your RDA


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