Readers' forum : Property plan

My client is in his early 70s and owns several properties. He has recently started to think about his potential liability to inheritance tax.

He and his wife (they own the properties jointly) are proposing to give away their main residence to their daughters – who are basic rate taxpayers – and then pay them a market rent while they remain living there. The house in question is repair intensive and he would propose to continue to pay for repairs himself. My client knows that he will have to live for seven years before the gift falls out of account. If he does not live that long I assume that his half share will be a chargeable potentially exempt transfer.

The property is in a provincial town and is old and unmodernised and it is thought that a market rent might not be all that much particularly if the...