Hi.The fact that the property may be sold before the seven year period following the gift is completed does not cancel the possibility of an IHT charge on the donor. Should the donor die within the seven year period, the value of the gift will be included in the estate of the donor. However, the IHT on the gift may be discounted under the tapering rules which you can read about here.It would be wise to consider taking out a term assurance policy, possibly with reducing cover as the seven year period progresses to lower the premiums, in order to cover a potential liability to IHT on such a large gift. Should the estate be unable to fund the liability to IHT on the gift, the recipient of the gift will be liable for it as you can read here.I hope this helps but let me know if you have any further questions.
Thanks for this, I understand that part.
However if the recipient (the daughter) sells the asset immediately and suddenly turns the net asset which she has inherited into cash, are there no CGT implications for the daughter? (I'd guess not, as she could just as easily have inherited the same value in cash as opposed to an asset!).
If the daughter sells the property, she may have CGT to pay if it has increased in value since it was gifted to her. The value of the gift at the time it was made is its cost for CGT purposes.
There may be no CGT to pay if the property was her main home for the entire period of her ownership of it and a maximum of the final 18 months of ownership if she wasn't living in it for part or all of that final 18 months, conditional on it having been her main hone at some time during her ownership of it.
Great thanks. Last question - does it make any difference if the lifetime gift is to a family member or a non-family member?