escaping inheritance tax , is it possible?

mossymum1_2

Can anyone suggest a way that my parents can give me the house after they have passed without having to pay inheritance tax or at least minimum please?don't mind giving to goverment but they have really cracked down now. thanks

Bossyboots

mossymum1 wrote:

Can anyone suggest a way that my parents can give me the house after they have passed without having to pay inheritance tax or at least minimum please?don't mind giving to goverment but they have really cracked down now. thanks

Have they worked out that their estate will be worth more than the IH allowance? It is only the value above the allowance threshold that is taxed, not the whole estate.

distilled

You might find this link useful

http://www.hmrc.gov.uk/pdfs/iht15.pdf

KathrynPenguin

Assuming they own the house jointly and they don't both die together they can each write you into their will as the beneficiary of their half of the house. Sadly I lost my Dad a few years ago and he left me his half of the marital home, this now brings the total estate that Mum has to leave me below the inheritance tax level. (well it does after the gifts she has made to my young son in the form of savings plans).

HLK

KathrynPenguin wrote:

Assuming they own the house jointly and they don't both die together they can each write you into their will as the beneficiary of their half of the house. Sadly I lost my Dad a few years ago and he left me his half of the marital home, this now brings the total estate that Mum has to leave me below the inheritance tax level. (well it does after the gifts she has made to my young son in the form of savings plans).

Does this mean your MUm has to pay a market rent on the half of the house you own?

Bossyboots

HLK wrote:

Does this mean your MUm has to pay a market rent on the half of the house you own?

No, it doesn't. Maybe you are thinking of the situation when parents sign over a proportion of the property to avoid IH. Leaving it in a will is treated differently.

The main downside to doing it this way is that if the offspring to whom it is left divorces or is made bankrupt. Usually though the surviving parent has a right to live in the property unhindered for their lifetime under the terms of the deceased parent's will.

Ian_W

If you go on the "Cutting Tax" forum there are any number of posts and replies about IHT like this one http://forums.moneysavingexpert.com/showthread.html?t=1538 which should help.

Bottom line is there are ways to minimise IHT and other taxes but they are not easy or straightforward because if they were everyone would do them and the government would be very cross and very broke!! Hence they try to cover every eventuality and close every loophole that's found.

rozeepozee

I would say this is an area where it's worthwhile getting some good legal advice and mutual wills drawn up for your parents. A good probate lawyer should know the pitfalls and it's easy to get it wrong and lose a lot in tax when a few hundred quid in legal fees would have avoided the problem. Bol!