When to pay Gift Tax

[ACCK01]

If you are gifted a house by a relative but are not allowed take full ownership of the house until the relative has died, when do you pay the gift tax? On receipt of the gift or on full owership of the house. Bearing in mind that if you die before your relative that the full ownership of the house reverts back to the relative to gift to someone else, or do whatever they like with.

 

[mf1]

If they give you the house, you register your ownership and they stay in the house with an exclusive right of residence but house is owned by you then tax is payable when house is given to you.

If they promise to leave you the house in their will then ownership will not pass until they die and will only pass if they have not revised their will. Tax would then be payable.

But if they give you the house now, they cannot subsequently take it back nor does it revert to them on your death - it will be part of your estate although they may still enjoy the right of residence.

mf

 

[ACCK01]

mf1, Thanks for the info.