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Exchange of land rule


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Jules

Posted on:
05/11/09 14:56

Subject: Exchange of land rule

Does anyone have any views on the application of the exchange of land rules in the following scenario: Father gifted family home to son 18 months ago. No SDLT paid. Son has mortgaged property and used part of fund to buy a smaller home for Father. Father moved in 12 months ago. Son is considering gifting smaller home to Father. I appreciate the arrangement is bizarre and causes lots of IHT issues such as PETs/GWR/POA, but that aside, is it possible to argue that the SDLT exchange of land provisions don't apply? Is the fact that the smaller property was not acquired at the time of the first transfer relevant, or is the critical factor whether the Son and Father agreed on this course of action at the outset? Any thoughts appreciated.

Patrick

Posted on:
05/11/09 15:23

Subject: RE: Exchange of land rule

The critical issue is whether the acquisiton by the son was entered into in consideration of the transfer to the father. If the transer to the son was truly a gift then it cannot be an exchange even if property is subsequently transferred back.

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