Reversing gift

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    Reversing gift

    Is there a way of reversing a gift of a property given as joint tenants. I want to remove my name on a house that i share with my mother. Its our only main resendential property. I also want to avoid being caught by GROB

    #2
    You need to give more details

    G - who was it from, who owns it and who lives in it, how long ago (CGT implications of returning the gift)
    ROB - what benefits are reserved?

    The way you avoid GROB is to have rent paid at full market rate (and pay tax on that).

    Comment


      #3
      Hi
      In 2016 mother gifted property as joint tenants to me. We both live in there together and will continue to do so. Im looking to get married so we wanted to end the arrangement.

      I think if i gift the property back it will cause a GROB for me as i will continue to live here. So is there any other solution for the property to go back into her sole name? Without us creating any grob/poat charges for ourselves

      Comment


        #4
        Also to add this is our main residence we dont own any other properties

        Comment


          #5
          If your mother gifted you the property and continued living there, the original gift should be flawed, because your mother retained a benefit.
          It seems to me (naive that I am), that for tax purposes it means that giving it back should have no effect - it was part of your mother's estate and remains part of it.
          As it never became part of your estate, I don't see what benefit you can reserve.

          You probably need a real solicitor to confirm the situation (and do the conveyancing / SDLT etc).
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            As above. No clear what you are trying to prevent? Are you trying to prevent 3% stamp duty on the next purchase? GROB is only relevant if some benefit is ... well.. a benefit.... otherwise nobody is interested in GROB .... so your GROB will be an issue if you DON'T OWN IT, and also don't pay rent... and even that will only be an issue if YOU were to die.

            Capital gains tax (and later inheritance tax) on returning the thing is far more relevant. And it will be in your estate as a PET for 7 years.

            Comment


              #7
              I was looking to move out as getting married. And i wanted to remove my name from deeds without any implications and put things back to how they were in my mothers sole name. Without causing any iht issues.

              Comment


                #8
                What and who benefits from you removing your name from the deeds?
                Are you trying to avoid paying the higher rate SDLT on another property?
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  Not worried about sdlt. I just dont wish to have 2 properties. I also want to protect my mum if i was to pass away first.

                  Comment


                    #10
                    Originally posted by vik2001 View Post
                    Not worried about sdlt. I just dont wish to have 2 properties. I also want to protect my mum if i was to pass away first.
                    How much is the property worth?

                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      Originally posted by vik2001 View Post
                      Not worried about sdlt. I just dont wish to have 2 properties. I also want to protect my mum if i was to pass away first.
                      Well in that case

                      a) CGT will not be payable on the reverse transfer providing the house has so far been your only home in the time you had a half

                      b) SDLT will not be payable on the reverse transfer provided it is i) a gift transfer and no money changes hands AND ii) there is no mortgage

                      c) The GROB thing that concerns you will only be relevant if it is
                      - Later asserted that this was not a genuine gift
                      AND
                      - You die before your MOM
                      AND
                      - Your estate including this half property are worth more than £375000 or so (as things stand now)
                      AND
                      - You carry on living there

                      Is all of that likely?

                      The reservation of benefit does not have any implications for whether or not you pay an extra 3% penalty on any further house you buy. The penalty involves property actually owned.

                      If your Mom's estate is worth more than £400K or so (including the full house) I would think very very carefully about whether this reverse gift is wise.

                      Comment


                        #12
                        The property is worth 410k. It has been our only main resendential property. There is no mortgage.

                        Was the transfer of the gift genuine. Because i read under s102b it needs to be a undivided share for my mother to live there else its a grob. Or being joint tenants it doesnt matter? Point being should it have been a gift of 50% share as tenants in common?

                        Could my mum buy my share of the house rather than me reversing the gift? That way she can become the sole owner again and i could continue living there without being caught by grob/poat.

                        Comment


                          #13
                          The gift from your mother to you fails as a gift for tax purposes.
                          The property hasn't left your mother's estate as far as I can tell.

                          If you were to die, it would be a slight complication, but your executor should be able to sort it out (you might want to leave a note somewhere explaining the situation).

                          If your mother were to die, you would inherit the property automatically, and there might be some IHT to pay, unless there's a spouse's allowance passed on from a deceased husband.

                          I'd talk to a family solicitor - you can probably sort this out with a fairly simple trust arrangement.

                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            Hi jp
                            Why does the gift fail? As we have it as joint tenants 50/50. We wasnt trying to remove it from her whole estate.
                            Hmrc site says if you gift part of property and all owners live together and share bills expenses then a market rent rate isnt required. So the gift hopefully should be valid.

                            Comment


                              #15
                              Originally posted by vik2001 View Post
                              Hi jp
                              Why does the gift fail?
                              The earlier gift from your Mom to you fails (as a PET from her) because you are giving it back ......



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