My wife and I, 72 and 70, own our £2.5mn home. Our only son, 34, is about to get married, and he and his new wife plan to move into our house later this year. The house will become the primary residence for the four of us all.
We would like to gift the house to our son. He will enter a prenuptial agreement with his future wife to keep assets in the marriage separate. What would the tax consequences of gifting the property to him be? Would the property become exempt from inheritance tax (IHT) after seven years? Is there any stamp duty to pay? And if he lives there for seven years and then moves out, how does this affect IHT?
David
Abbie West-Kelsey, assistant tax manager at Blick Rothenberg, says:
IHT is currently charged at a rate of 40 per cent on death. Based on the current value of the property (£2.5mn), and ignoring any nil rate band thresholds that you and your wife may have, IHT of up to £1mn could be due on your home. This however could all change at the Budget this week.