CyprusLiving

Hi Mark,

I am resident in Cyprus for tax purposes and have assets in the UK, if I make a gift of my Cyprus house to my children during my lifetime will this gift be taken into account for UK inheritance tax purposes, ie the seven year PET rule.

regards,
Phil

Our friends in Pissouri have left their property to their daughter and they have been resident in Cyprus for over 20 years. They tell us that they were subject to the 7 year rule, but that has now passed. Maybe the rules have changed since then.

If you want to gift away a property, it is subject to the seven-year rule. If you die before seven years is up, then IHT could arise. However, if you continue to live in the property, even after giving it away, it becomes a ‘gift with reservation’ meaning that you still benefit from it and subsequently IHT is applicable.
also
http://www.cheesman.co.uk/uk-and-overse ... -liable-2/
Hope this helps

Doverlea,
check online, according to what I have just read, if you live abroad you can only nominate U.K. property under PET rules, but all property is subject to IT. Best to ask a Lawyer, I think.

Best to go and see Blevins Franks to sort out things properly. Been with them for years - very satisfied.

Good advice to get professional assistance, but remember it is very, very difficult to escape UK IHT. 18 year rule, no ties etc.

In simple terms Bazzra is correct, any gift, where you retain benefit i.e. a property which you still live in, a trust fund that you remain beneficiary to etc are 'gifts with reservation' and do not qualify as 'potentially exempt transfers' for IHT.
With your property you can still live in it and make the gift a PET if you pay the new owners (your children) a fair market rent for continued use of the property. You would need to have a rental agreement in place and, if challenged, be able to prove that rent had actually been paid.

I hope this helps.

All the best