Mum would continue to live in the property but will be paying the market rent to owner (son)
She has taken out a policy to cover the potential inheritance tax for the following 7 years
Thank you for your prompt reply.As it is your intention to pay full market rent on the property to the new owner, the gift would be deemed potentially exempt transfer and the seven year rule would apply.The recipient of the gift would receive it free of tax. There is no taxation on gifts in the hands of the recipient.If you were not to pay the full market rent, then this gift would be condidered a "gift with reservation of benefit" and the property may be subject to inheritance tax.
There is no immediate inheritance tax implication for the gifter.
I hope this is helpful and answers your question.
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Does Mum have to pay TAX on the value of the house over the £325,000
"In addition if the property is worth over £325,000.00 TAX is payable straight away at 20% and then a further 20% on death" text quoted from solicitors letter this morning ??
Thank you for your reply.Mum's estate would have to pay IHT on estate in excess of £325k.
Lifetime gifts to an individual under PET are not taxable at the time of granting a gift.You may like to read here