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Inheritance tax

Gift main redidence to son but stay in residence

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Where a father gifts his son his home and does not vacate the home.  To qualify as PET I think the father must pay the son a market rent. If he survives longer than 7 years the gift becomes exempt from tax.

If the father dies after 1 year of gifting does the home value become liable in the 7 year cumulation process or is it part of the death estate where it would attract another £125000 exemption. 

Any thoughts much appreciated from fiscal thinkers

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By Tax Dragon
29th Jan 2019 19:07

It's always a PET. The rent might avoid a GWROB.

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By Justin Bryant
30th Jan 2019 10:19

s102B IHTA 1984 joint occupation planning is obviously better than paying rent to avoid GWR/POAT.

Failing that, if you look in EC’s book (50.89 of the 4th ED) she says that the full consideration defence is available if the consideration is structured as an annual payment under deed. Provided you fall within the s727 ITTOIA exemption the payments are outside the scope of IT.

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