Pre owned assets election for cash

Pre owned assets election for cash

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Mother selling house for £100k. Gifts to son. Son buys a better house for £200k and mother lives there rent free. Pre owned assets charge would presumably apply to mother on rental value x 1/2. Nothing else left in mothers estate therefore IHT not an issue. Am I correct in saying mother can elect to ignore the cash gift purely for IHT purposes and this would prevent the benefit being taxed under the pre-owned asset rules but would still legally now be the sons beneficial property.
Andy Shady

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By User deleted
05th Jan 2007 16:40

An election probably works
The general rule is that the donor can elect to have the gift treated as one made with reservation so 100k remains in mother's Estate here and the income tax charge goes out the window.
I believe the new house should be considered as outside the Estate, as being owned by the son.

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