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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a question about Inheritance Tax rules. According

Customer Question

I have a question about Inheritance Tax rules.

According to HMRC http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm

"if you give half of your home to your children, they move in with you and you share bills jointly, the half that you give them won't be treated as part of your estate for Inheritance Tax purposes as long as you live for seven years after making the gift."

Does that simply cover transferring 50% of the value of the property, or does it mean that a house has to be split into 2 separate domiciles in order to be eligible for IHT exemption after 7 years?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

It means that your children move in with you, they have the run of the house and you give them beneficial ownership of 50% of the property such that if it was sold, they are entitled to half the disposal proceeds. You would need to have a document drawn up by a solicitor to be signed by all parties and it should be witnessed. You would need to share the bills jointly.

 

Should you survive for at least seven years after making the gift, its value will not form part of your estate for Inheritance Tax purposes. There may be Capital Gains tax implications if the house has not been your main home for the entire period of ownership.

It does not mean that you have to physically split the house in two by building dividing walls etc.

I hope this helps but let em know if you have any further questions.

Expert:  TonyTax replied 2 years ago.
I have to go out for a while but I will be back a little later to answer any follow up questions you may have.

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