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I am 66 and own my home, which is worth £1.2m I am asset rich

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I am 66 and own my home, which is worth £1.2m I am asset rich but cash poor. My wife has been dead for many years. I have one child. Would transferring half of my house to my child as a gift - to be held as tenants in common - help to mitigate inheritance tax liability for my child when I die? I understand the 7 year rule as applied to gifts. If I survived say 10 years would only half the value of the house be liable to inheritance tax?
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I would gently point out that a residence left to children increases the tax free amount available progressively from 325K from 2017 to 2020 to one million pounds. You assume you will last another decade so you should have little to worry about and you could always protect those few odd years with a decreasing term life insurance. All right, your property is worth some two thirds of your normal 325K, but you could mitigate this by giving moneys away having regard to the seven year rule. You have grasped the seven year rule, but perhaps do not appreciate that if you gifted the property to your child and remain in occupation this is a Gift with Reservation and the seven years does not start to run until you vacate. Benjamin Franklin, with his adage that in life there are but two certainties, death and taxes, strikes again! Alternatively you could sell up, buy afresh, give him the money to buy half of a new home and then the 50% might work. The one million might well be increased in successive budgets anyway. I do hope my answer has given you some food for thought.
bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 10 months ago.
Thank you for your support.

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