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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5113
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a client who is considering selling a property

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I have a client who is considering selling a property for more than the inheritance tax limit of £325,000 and therefore there may well be tax due to pay. However, would there still be inheritance tax payable if the property was transferred to her children as a gift?
Kind regards

Hello and welcome to the site. Thank you for your question.

If your client is selling the property that is her only property and also main residence, then

CGT implications
- no CGT payable as all gain covered by private residence relief

IHT implications
IHT only payable if the estate at the time of death exceeds the threshold of £325,000.

Gift to children
The gift to children is regarded as a potentially exempt transfer and seven year rule applies to the gift.

If your client survives for seven years after making the gift, no inheritance tax is due as the gifts are generally exempt from inheritance tax no matter what the value.

However, if she dies within this time then these PETS are added to the estate to ascertain if it exceeds the threshold for IHT.

More information on this can be found under "Gifts that might be tax-free" here

I hope this is helpful and answers your question.

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Customer: replied 2 years ago.

Thanks very much.