The seven year rule does not apply to gifts with reservation.
However, if you die within seven years of giving away all or part of your property, your home will be treated as a gift and the seven year rule will apply.
Another key aspect of the seven year rule is the taper relief and comes into play if the benefactor doesn’t live for the full seven years.For the first three years, the tax payable on gifts is at 40 percent, it then slides down to 32 percent for three to four years, 24 percent for four to years, 16 percent for five to six, and eight percent for six to seven.
The taper scale supports the notion that it is better to gift sooner rather than later.
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