Can I Put My House in My Son's Name to Avoid Inheritance Tax?
Transferring your home to your son while continuing to live there will not remove it from your estate for IHT purposes. HMRC calls this a "gift with reservation of benefit."
If you gift your home but carry on living in it rent-free, HMRC treats it as still belonging to you. The value stays in your estate when you die, and no IHT saving is achieved. The only way around this is to pay your son full market rent, which most people do not want to do.
If you genuinely move out and your son takes full possession, the gift becomes a potentially exempt transfer. Survive seven years and it falls outside your estate. Die within seven years and the value is added back.
There is another problem. Once the property is in your son's name, you lose the £175,000 residence nil-rate band. This can actually increase the total IHT bill rather than reduce it.
There is also a capital gains tax risk. If your son later sells the property, he may owe capital gains tax on any increase in value since you made the gift. Overall, this approach usually creates more problems than it solves.
If you gift your home but carry on living in it rent-free, HMRC treats it as still belonging to you. The value stays in your estate when you die, and no IHT saving is achieved. The only way around this is to pay your son full market rent, which most people do not want to do.
If you genuinely move out and your son takes full possession, the gift becomes a potentially exempt transfer. Survive seven years and it falls outside your estate. Die within seven years and the value is added back.
There is another problem. Once the property is in your son's name, you lose the £175,000 residence nil-rate band. This can actually increase the total IHT bill rather than reduce it.
There is also a capital gains tax risk. If your son later sells the property, he may owe capital gains tax on any increase in value since you made the gift. Overall, this approach usually creates more problems than it solves.