From: "Tim" 
Newsgroups: uk.finance
Subject: Re: 'New' IHT rules is no concession.
Date: Thu, 18 Oct 2007 13:18:27 +0100
Bytes: 5176

>>>>> "Tim" wrote:
>>>>>> Howso?  In effect, the child(ren) could gift *cash* to
>>>>>> the parent, then the parent pay the cash back to the
>>>>>> child(ren) as rent. There's no effect on the parent's
>>>>>> future taxable estate (the cash isn't left in it at time of
>>>>>> death & hasn't been gifted out within 7 years either).
>>>>>
>>>> "Ronald Raygun" wrote
>>>>> Well, the children *could* gift cash to let the parent
>>>>> pay rent, but if they don't, are you suggesting that it
>>>>> should be retrospectively pretended that they had?  ...
>>>>
>>> "Tim" wrote:
>>>> No, I simply suggest that any gift from the children,
>>>> from allowing the parent to live there rent-free, is just
>>>> the **rental value** (as and when rent would be due).
>>>
>> "Ronald Raygun" wrote
>>> I see, so when you mentioned gifting cash,
>>> you were being mischievously misleading?  ...
>>
> "Tim" wrote:
>> Not at all - no mischief intended.
>
"Ronald Raygun" wrote
> You do a good line in unintended mischief, then.  :-)

:-)

> "Tim" wrote:
>> I was trying to point out that the value of
>> the gift is the rental value, by putting this
>> into terms of cash notionally changing hands.
>
"Ronald Raygun" wrote
> But you didn't.  You put it in terms of cash actually changing hands.

I thought I said "...could..." -- oh yes, I see I did

>> "Ronald Raygun" wrote
>>> Good point.
>>
> "Tim" wrote:
>> Yep, I know!
>
"Ronald Raygun" wrote
> Wipe that smirk off you face.

:-(

>>>> "Ronald Raygun" wrote
>>>>> ... Given the unevictable sitting tenant in the form of
>>>>> the parent who owns the other half, the child's half is
>>>>> effectively unmarketable and hence practically worthless...
>>>>
>>> "Tim" wrote:
>>>> I don't think it would be unmarketable - indeed, I would
>>>> buy that 'worthless half' off them for a tenner (they'd be a
>>>> tenner up!) and I wouldn't mind paying the CGT when the
>>>> house eventually gets sold (at whatever point in the future).
>>>
>> "Ronald Raygun" wrote
>>> I'd say if I could only get £10 for half a house,
>>> then it *is* effectively unmarketable.  ...
>>
> "Tim" wrote:
>> Why do you say that?
>
"Ronald Raygun" wrote
> Because it is effectively impossible to realise the
> true value immediately.  Its "true value" is, if you like,
> latent, and locked away for an indeterminate time.
>
> "Tim" wrote:
>> The comment only really makes sense if you believe
>> that the "true" value is much higher than £10. But in that
>> case, you can't also say that it is "practically worthless"...
>
"Ronald Raygun" wrote
> It is "practically worthless" *at the time*.

If the owner thought that, then they
should  be happy to accept the tenner!

But if they believed they'd be able to get much more
at some point in the future, then they should value the
house (on a discounted cashflow basis) at a higher value
than ten pounds.  I'd probably offer a bit more, too!

>> "Ronald Raygun" wrote
>>>  I mean, as co-owner you would have rights to occupy too,
>>> and you could hang up your smelly socks in every room,
>>> or deport yourself unpleasantly in some other manner.
>>
> "Tim" wrote:
>> Sounds like you are suggesting some ways to
>> ensure that they leave sooner rather than later.
> ...
>> Ta!
>
"Ronald Raygun" wrote
> Why?  ...

Because it would "help" me if I did buy the house for a tenner ...