Inheritance tax: The rules Britons need to know when gifting their home before death | Personal Finance | Finance
If Britons want to leave their house to anyone else, this will count towards the value of their estate.
However, there are ways that Britons can pass on their property whilst they are still alive to cut down the liability for their loved ones when they die.
People can gift their property away if they move out and then live for another seven years, due to what is known as the seven-year rule.
According to these rules, gifts given in the three years before death are taxed at the full 40 percent.
Anything given three to seven years before the death is then taxed on a sliding scale known as “taper relief”.
Between three to four years, the gifts will be taxed at a rate of 32 percent, between four to five it is taxed at 24 percent, five to six will be taxed at 16 percent and between six to seven it will be taxed at eight percent.
If Britons want to continue living in their property after giving it away they will need to pay rent to the new owner at the going rate.
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