Query about Ownership of Land

[Bainbury]

My parents are both still alive they are 90 and 85. When they retired they decided to build a house and when they bought the plot of land over 25yrs ago they put it in me and my brother's name. The house that they built on it is worth around £575,000. Their estate wouldn't be over the inheritance tax threshold. My question is as me and my brother own the land do we automatically own the house? If we do does this mean we would have to pay capital gains of 28% if we sold it after their death because it would be a second home for the both of us - or would it be a part of our inheritance which would mean we wouldn't need to pay any tax. If it is the former - would we be better off handing the land back to our parents and inheriting it instead. If we did that would the 7 year rule apply? They haven't paid us any rent for the land over the years.

[atticus]

Clearly you and your brothers own the legal title to the land, and therefore to anything built on it.

As to your other questions - take good professional tax advice if there is enough at stake.

[MaryS57]

The problem here may be "gifts with reservation." Your parents lived in the house built on the land they had gifted you, but they did not pay a commercial rent. Ask a tax professional about GWR rules, I think that your parents, while meaning well, may not have achieved what they hoped.

[Pezza54]

I think I may have found the answer.
You and your brother are the legal owners of the land and property
Your parents, not paying market rent, are the beneficial owners
As beneficial owners the value of the property including land is included in the surviving spouse's estate when he or she passes for IHT calculations
For CGT, the value starts at the date of death of the 2nd spouse, and is not back dated