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Scenario 1A: If my father is residenced in the UK and owns a

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Scenario 1A: If my father is residenced in the UK and owns a property in the UK, and he puts the property in my name (I am residenced in France), will I pay inheritance or gift tax on the property? If I then gift 50% of the same property to my sister once she is overaged, will she pay gift tax on the 50% given to her?
Scenario 1B: If my father is not residenced in the UK and owns a property in the UK, and he puts it solely in my name (I am residenced in France), will I pay inheritance or gift tax on the property? If I then gift 50% of the same property to my sister once she is overaged, will she pay gift tax on the 50% given to her?
Scenario 2: Will I pay tax on the UK property in France because I am domiciled in France if my father is also not domiciled in France?
Submitted: 1 month ago.
Category: Tax
Expert:  bigduckontax replied 1 month ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

1A. The UK has no gifts tax regime so the gift comes to you tax free. However it does create a Potentially Exempt Transfer (PET) in your Father's Inheritance Tax (IHT) affairs. PRTs run off at a taper over seven years and in the event of the donor's decease within this period are added back to their estate for IHT purposes. PETs are the first to suffer IHT and if the estate is insufficient to pay the tax on the PET the liability cascades down to the beneficiary for immediate payment. The classic defence against a PET is, of course, a reducing term life insurance policy.

1B. As far as your father is concerned there is no change from 1A. The gift to your sister may be caught by French gift tax which I recall kicks in at 5K Euros. I cannot assist you with French taxation, it is so complex and so constantly changing that the empoyment of a local professional is essential. There appears to be a just under 16K Euros tax free element in an brother/sister transfer, but as I said, a local check is essential.

I do hope that I have shed some light on your position.

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