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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10777
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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Dear Lawyer, Both our adult childrten (49, 52) are

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Dear Lawyer,
Both our adult childrten (49, 52) are separating from their partners this summer and need financial help in finding a house to buy. One has a small amount of capital from the sale of the home she shared with her previous partner. And the other has a half stake in the family home which his wife is determined to hold onto as their teenage daughters live with her.
We have a 4-bedroomed detached house owned by us as tenants in common, and for several year I have wanted to downsize (we are now 80) but somehow the moment never came. Now the current situation seems to provide the trigger for making a move. However I am confused about inheritance tax and capital gains tax. If we sell our house and divide the proceeds between the children now (as would happen anyway when we die) thus enabling them to buy what would become their new homes, are they liable for IHT or CGT? We would not be retaining any 'benefit' from the house as have somewhere to rent elsewhere. But we cannot promise to live for seven more years!

Hi, thanks for your enquiry. If you were to sell and give £x amount to your 2 children, there would be no liability for CGT at all. As regards ***** ***** position is that if you were to survive for a period of 7 years from the date of the gift, the amount of the gifts would NOT form part of your Estates when calculating if IHT is payable. If you were to die within 7 years of making the gifts, the whole amount of the gifts or a percentage of it would still be classed as being within your Estates when it comes to calculating any IHT liability. The amount of the gifts attributable to your Estates is calculated on the following basis and is called "taper relief".

This is how it would be-

  • If the gift was made less than three years before death, no reduction in tax is due
  • If the gift was made three to four years before death, tax is reduced by 20%
  • If the gift was made four to five years before death, tax is reduced by 40%
  • If the gift was made five to six years before death, tax is reduced by 60%
  • If the gift was made six to seven years before death, tax is reduced by 80% I hope this assists you and sets out the legal position. Kind Regards Al
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