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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4428
Experience:  FCCA FCMA CGMA ACIS
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Hi,My father passed away few years ago and left a house

Customer Question

Hi,

My father passed away few years ago and left a house in UK. I and siblings have given our share to mum so the property is in her name now. All of us live in UK. May God forbid, should something happen to her, how can the children receive their share in the property without paying any inheritance tax?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I'm Keith and happy to help you with your question. In a word they can't. On your Mother's death her estate will be valued and if it exceeds 325K (plus any bequest to charities), any amount in excess of this will be taxed at 40% flat rate. Any bequest to her husband, if she remarries (don't laugh, I am covering all bases), will be an inter spousal transfer and outside the scope of UK taxation.

 

I had to deal with a case recently where a mother had given her house to her son who had rented it out. She wanted it back again and agreed to pay his Capital Gains Tax. It cost her 50K to get her own house back, ouch! So sorry to have to rain on your parade.

 

She cannot give it back to you and live for another 7 years to eliminate any Potentially Exempt Transfers for Inheritance Tax as if she remains in occupation it is a 'Gift With Reservation' and the 7 years is ambulatory (good word that) ie moves forward and does not start until she vacates.

 

I cannot help feeling that you are on a hiding to nothing in this attempt to avoid tax.

 

 

Customer: replied 3 years ago.

Hi, Thanks for your reply. I read somewhere about some "7 year rule" thing whereby if she was to gift the property to her children or something and then lives for another 7 years after that then there is no CGT. Something along those lines.

Expert:  bigduckontax replied 3 years ago.

Yes, if you look at my original answer you will see I amended it 3 minutes after you first read it!

 

The 7 year rule applies to Inheritance Tax, not to CGT. My revised answer may help you.

 

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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.