Mark McLaughlin highlights possible limits to important inheritance tax exceptions from a ‘gifts with reservation’ charge where a former residence is gifted by an individual and later reoccupied by them.
Most lifetime gifts of a residential property (e.g., from a parent to adult offspring, where the parent is going into a nursing home) are straightforward ‘potentially exempt transfers’ (PETs) for inheritance tax (IHT) purposes, which become exempt gifts if the parent (in this example) survives at least seven years thereafter.
Trapped in the IHT net?
However, what if the parent returned to live in the gifted property within seven years? Anti-avoidance rules (‘gifts with reservation’ (GWR)) are broadly designed to prevent ‘cake and eat it’ situations whereby individuals seek to reduce exposure to IHT on their estates by
