CGT / IHT Planning Query

[fogofwar]

Dear Sirs,

I would be extremely grateful for your guidence in a CGT/IHT matter. I'll set the scene, if I may:

Daddy did very well running his own business during the 80's and 90's. The fruits of this are 5 properties bought from late 80's onwards:

1. bought: 1988 £50k now worth £200k+ (our original family home, moved out after 18 years in 1999)

2. bought: 1991 £50k now worth £200k+

3. bought: 1995 £50k now worth £200k+

4. bought: 1997 £50k now worth £200k+

5. bought: 1999 £100k now worth £200k+ (our latest family home)

All are jointly owned by my father & mother.

(i have rounded the numbers to allow make it all easier to consider)

We are 3 brothers and 1 sister ( + 1 son-law & 1 daughter-in-law, if that opens any other avenues) in our late 20's (as you can imagine we are very, very grateful children :D ), and dad is looking for a way to transfer this property to ourselves, at the same time avoiding or minimising as much cgt and or IHT as possible.

We have a good collective cashflow and do plan to purchase property in future.

Your honoured suggestions please...

[Tax Accountant]

Just some general points to consider:

(1) Gift of properties to relatives other than to a spouse will be chargeable to CGT as if the properties were sold at open market value.

(2) Additionally, lifetime transfers of value are Potentially Exempt Transfers (PETS) and may incur IHT if the donor dies within 7 years of the gift.

(3) All CGT gets washed out at death. Instead, IHT is charged on the value of the estate in excess of £285,000 transferred to anyone other than a spouse.

(4) One planning matter is to make PET of assets, preferrably assets which do not give rise to a charge to CGT. This way one is divesting assets which are potentially exempt from IHT and also incurring little or no CGT.

(5) If any of the properties needs to be considered for transferring, these should be the ones which benefit from PPR relief.