Principal residence gift with reservation

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My clients are a husband and wife, born in India, who live in a large house in London with their two children who are married themselves, with children. The two siblings were born in the house over thirty years ago. Therefore, their home accomodates three families in total. The parents are aged and wish to sign over the house to their two cohabiting children, who lovingly care for their parents and will do so for as long as they can. Should the aged parents still pay a market rent to the children to avoid the gift with reservation regulations? if so, should the amount still be market value or MV divided by three, or some other modest figure?

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By David Ex
23rd Jan 2024 13:17


You need to take professional advice.

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Replying to David Ex:
By FactChecker
23rd Jan 2024 13:44

Puzzled by the former (the facility having been withdrawn I thought)
+ fully endorse the latter point (sounds like a lot of money at stake).

OP: would you care to explain the context in which you think that continuation of parents living there doesn't constitute a reservation on the gift?
[BTW any 'division' usually relates not to proportions of ownership, but to the %age of property that becomes physically inaccessible to the donor.]

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By Montrose
24th Jan 2024 22:37

There is good news, Potentially the arrangements could be structured to enjoy the benefit of FA 1986 s102B(4). This specifically addresses your shared home query,
and would mean the gifts could avaoid being GWR's.
It would necssitate a gift of say 1/3 of the property to each child , and the child paying his/her fair share of the running costs but not more-in fact the parents might arrange to pay all the running costs so donating additionally the running costs each year. You need to take professional advice.

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Replying to Montrose:
By B.R.
29th Jan 2024 09:24

Thank you.

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