Dear All
Can someone shed light on how the 7-year rule works regarding gifting a property before death and remaining there.
I look forward to your responses.
That’s a very wide question. In summary, the property usually remains in the donor’s estate for IHT and the 7 year clock doesn’t start until they relinquish the benefit.
IHTM04071 - Inheritance Tax Manual - HMRC internal manual - GOV.UK (www.gov.uk)
Andrew Goodman
Osborne Clarke LLP
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As Andrew says, it is a gift with reservation of benefit and therefore ineffective as a PET.
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To add to what Andrew said, one potential way around the rules is for the donor to pay full market rent to the donee. That way the 7-year clocok should start ticking.
You’d need to tread very carefully indeed, and establish what the market rent would actually be by e.g. instructing a surveyor. Keep full and accurate records as well in case the taxman cometh knocking.