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Mitigating potential inheritance tax liabilities by giving away a main residence is a relatively common tax strategy. However, what terms should be included in a leaseback from the donee such that there will not be a gift with reservation of benefit?
For inheritance tax saving purposes giving away one’s main residence can work well albeit involving capital gains tax for the donees and the creation of a taxable rent.
However one of the practical issues for the donor is security of tenure. So that means a lease at arm’s length. Apart from this aspect what other characteristics should such a lease have? For example can it be for life?
If that is not possible can it contain a right to renew on then current terms? Can the tenant undertake to do repairs and so on? Are there any other specific terms that should be contained in such a lease and are there any other factors that are important to bear in mind when considering such a plan?
In particular I do not want to include or omit some term that might prejudice the...
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