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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My granddaughter lives with me in my house. She has lived

Resolved Question:

My granddaughter lives with me in my house.
She has lived here for 18 years and she is now 21.
It is her home.
If I leave my hose to her when I die, will she be liable to tax.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you give me an idea of what your net worth is please. Are you single, widowed or divorced?
Customer: replied 2 years ago.

My net property worth is £700,000.

I am widowed.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

Hi

For some reason your system will not accept my e-mail address.

I do not remember using your service before so please can you reply to my e-mail address of

*****@******.***

Thank you regarsds

Expert:  TonyTax replied 2 years ago.
I'm back.

I'm afraid I cannot send replies to specific email addresses but there is nothing to stop you emailing this answer to yourself.

If when you die, your estate consists of your house and little else and it is in excess of your Inheritance Tax nil rate band which is currently £325,000 and any unused part of your late spouse's nil rate band (current maximum £325,000) which your executors will be able to claim and which you can read about here, then if there is not enough cash to pay the IHT liability, the house may need to be sold to pay it. If that was the case, then the balance of the estate would be paid to your granddaughter with no further tax to pay. If you have enough liquid assets to settle any Inheritance Tax liability, then there would be no need for your executors to sell the house.

If your granddaughter subsequently sold the house, she would have no tax to pay as it will have been her main residence for the entire period of her ownership of it.

If you gifted the house to your granddaughter and lived for seven years after making the gift, then normally it would cease to be part of your estate for IHT purposes. However, as you will continue to live there, the gift will be ineffective for IHT purposes under the reservation of benefit rules and the seven year clock would not start ticking until you renounced the reservation of benefit or paid a market rent to your granddaughter. Take a look here for more information.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15886
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Expert:  TonyTax replied 2 years ago.
Thanks for accepting my answer.

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