Difficulty understanding inheritance tax implications on gifted house deposits

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  • Malthusian
    Malthusian Posts: 10,861
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    Pincher wrote: »
    This fantasy of professionals don't mess up is laughable.

    Nobody says that professionals don't mess up. The point is that when they do mess up they are liable for redress. When you DIY and mess up, nobody is liable except you.
  • Pincher
    Pincher Posts: 6,552
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    Somebody who actually got advised and have come through this stuff unscathed, please step forward.

    I have a feeling the Probate Office and HMRC are not so alert, so some people get through unchallenged. If they get a new regime that decides to really turn the screw, the professionals will just advise me to throw my mother out.

    But make sure she doesn't die for seven years. :eek:

    More and more people will get caught up in this situation.
    If it's not your parents, it could be you.
  • Pincher
    Pincher Posts: 6,552
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    Malthusian wrote: »
    Nobody says that professionals don't mess up. The point is that when they do mess up they are liable for redress. When you DIY and mess up, nobody is liable except you.

    I think you'll find the will and inheritance planning was done between the deceased and the lawyer/account/adviser, many years ago. You are assuming it's easy for the Executor to sue the "professional", who may not even be trading any more.

    I find it amusing that all the lawyers and accountants suddenly became LLPs around 15 years ago. Limited Liability Partnerships. Somebody will come along and tell us how generous the pay out will be if you sue a LLP, no doubt.
  • bigadaj
    bigadaj Posts: 11,531
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    Pincher wrote: »
    I think you'll find the will and inheritance planning was done between the deceased and the lawyer/account/adviser, many years ago. You are assuming it's easy for the Executor to sue the "professional", who may not even be trading any more.

    I find it amusing that all the lawyers and accountants suddenly became LLPs around 15 years ago. Limited Liability Partnerships. Somebody will come along and tell us how generous the pay out will be if you sue a LLP, no doubt.

    If you we successful in suing, or even enforcing a compliant, then the pi insurers will pay up if the firms are unable to do so.

    Assuming you are using legitimate, regulated companies that is.
  • Pincher
    Pincher Posts: 6,552
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    The rest of the assets fit into the inheritance threshold pretty well, but if this one property isn't exempt when she passes away, I am looking at £400k~£500k in taxes.

    I did too good a job redecorating her room and bathroom.
    She really doesn't want to leave.
    I would gladly spend the £400k on five star retirement homes, but no, she doesn't want to live with strangers: I would volunteer for the Mars mission if I cold save £400k in taxes.

    Additional nil rate band going up to £175k 2020/21, which will help. So, pray a lot, that she will stick around until 2021.
  • Keep_pedalling
    Keep_pedalling Posts: 16,372
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    Based on those figures the house must be worth in the region of £1.25M, so I dread to think what the market rent on that would be.

    The wise move would have been to downsize and gift you cash, but however much tax the estate ends up paying you still have a very large sums of money coming to you, that is assuming she does not out live her.
  • Pincher
    Pincher Posts: 6,552
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    My latest fantasy is to have her buy the house back with a 90% mortgage.

    The £1million debt would wipe out all her assets. Sweet dream.

    Five year fixed at 2% is £20k a year. Since I will have the £1.1million cash, I can buy some income fund that pays 3%, which will cover the repayment.

    Who would lend £1million to an 88 year old? :)
  • grey_gym_sock
    grey_gym_sock Posts: 4,508 Forumite
    Pincher wrote: »
    Who would lend £1million to an 88 year old? :)

    you could :)
  • Pincher
    Pincher Posts: 6,552
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    you could :)

    Too obviously a tax avoidance scheme.

    Spoke to Metro Bank, they have a Private Banking operation that requires £1million of "business" to qualify. So, depositing £1million to get ~1.2% qualifies, so does borrowing £1million.
  • Motormad
    Motormad Posts: 134 Forumite
    A massive thanks to you Pincher for bringing this 7/14 year rule to my attention again.I remember reading about this before but thanks to your links I now think I understand them at last.Im still trying to understand the taper relief rules as the obvious thing to believe is that it is a simple percentage reduction in the original gifted amount which is the wrong assumption completely.I share your disgust at these complicated rules which are so hard to understand and remember as you grow older but on the bright side it led me to realise I should retire early or start spending my savings.
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