Inheritance tax planning for your home

By Gregory Laming

For many people, their home is their most valuable asset and can give rise to a significant inheritance tax (IHT) liability on their death (or the death of the surviving spouse). The classic issue for many people is that on the one hand they would like to mitigate the IHT liability, but at the same time they would like to remain living in their home. 

How can an individual give away their main residence in order to mitigate their future inheritance tax liability and continue to occupy, without being caught by the reservation of benefit provisions? 

The IHT legislation includes a set of rules known as the ‘Gifts with Reservation of Benefit Rules’. These complex rules mean that, even though you have given an asset away but you continue to derive a benefit from it, e.g. you give away your home but you continue to live there, you are treated as if you still own it — and it therefore forms part of your taxable estate on death…

Click on the link below to read the rest of the Mills & Reeve briefing.

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