H & W wish to gift the family home to their adult son and to continue living in it. They understand that they will need to pay a full market rent to avoid a GWR.
Their son will continue to live in the property with them. They are aware that under s102B(4), FA 1986 they could give away a share of the property to the son and live in the property with him without having to pay a market rent. However, they cannot give away 100% (views seem to differ on how much you can actually give away) and, of course, if the son decides he wants to move out, then the planning will fail.
They have significant income and therefore wish to proceed with the full market rent option. They understand that the son will be subject to income tax on the rental income. However, how is the full market rent assessed? Will it be the market rent for the lease of the whole property or will it be a lower rent taking into account the occupation of the son (say 1/2 or 2/3 of the full rent)? There seems to be very little guidance from HMRC on this point.
Any assistance appreciated. Thank you.
Tim C