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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4995
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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what is the immediate tax implications for the gifter of a

Resolved Question:

what is the immediate tax implications for the gifter of a house transfer under PET rule from Parent to child
house value £410000 (£85000 over inheritance threshold)
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Please clarify -
Are you going to continue to live in the property once it has been gifted to your child or are you moving out?

Many thanks
Customer: replied 3 years ago.

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

Expert:  taxadvisor.uk replied 3 years ago.

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.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

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 ??

Expert:  taxadvisor.uk replied 3 years ago.

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

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/

I hope this is helpful and answers your question.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes.