Can I give my parents £150K to clear their mortgage?

custardy

cant you 'buy' it for £150k with a contract that both parents have a right to live there till death?
obvously you would need to address who pays for upkeep etc in the meantime
then you own the house and they know they have a roof over their heads

sloughflint

custardy wrote: »

cant you 'buy' it for £150k with a contract that both parents have a right to live there till death?
obvously you would need to address who pays for upkeep etc in the meantime
then you own the house and they know they have a roof over their heads

I'd have thought that buying the house for anything less than market value involves gifting from the mother so risk of deprivation of assets and CGT implications in the future for OP when comes to sell.

localhero

Molan,

There are various options open to you, but in order to provide an informed analysis of the tax implications as well as all of the practicalities, you will need to provide more info. In particular:

1) What is the total value of your mother's estate? (assets less liabilities)
2) What is the total value of your estate including the £150k that you intend to invest into the property?
3) Whether you have children of your own?
4) Has your mother's companion contributed towards the purchase or improvement of the house?

Fly_Baby

I do find it somewhat bizarre. OP's mother has bought her house with her earnings. Why cannot she just do whatever she likes with it without involving the taxman? Why does the state need to be so greedy? In this thread, the OP has been given mane different options but each of them would involve tax implications and each would require help from a solicitor.

It is not a scam, not a money-laundering scheme. A parent wants to hand over HER OWNED earned asset to her own child. The child wants to invest HER OWN earned and taxed money into this asset. It should no longer be the taxman's business. He would have received his due share as taxes from OP's and her mother's salaries, the stamp duty etc, etc. It's a family, and family members are supposed to have a right to dispose of their assets in any way they like. Why cannot a daughter just let her own mother live in the house for free? Why cannot a mother just pass her property to her child? It's their business and nobody else's.

I realize that these are rhetorical questions but I do wonder how it has come to be so complicated and so expensive.

Susan_Frost

Fly Baby

Cos life's a !!!!!

I agree with your sentiments

Fly_Baby

Susan_Frost wrote: »

Fly Baby

Cos life's a !!!!!

I agree with your sentiments

Susan Frost, no, not life - law is!

It is plain ridiculous and unfair that even parents cannot leave their estate to their own childrens without them worrying about IHT. So what if it's worth a million? They have paid for it and earned it and paid their taxes whilst earning to pay for it - so why does it have to be any extra tax? :mad:

HappyMJ

Can't we give as much as we like to anyone we like (as long as we don't die in the next 7 years)???

Rosie75

It's not so much about inheritance tax. That's unlikely to be an issue in this case. The problem arises if OP's mother needs to go into a care home at some stage. Her house would be counted as an asset and used to fund her care, which (unless OP takes steps to protect it) could eat up the £150k gift to the parents. Re. parents making substantial gifts to their children, social services look for "deliberate deprivation of assets" (ie. someone giving their home / savings / other assets to their children in order to avoid paying for care in the future) and take steps to recover those assets. Unlike inheritance tax, they can theoretically look at gifts that were made more than seven years previously.

Susan_Frost

It sounds like buying into something makes it legally, partly, yours. But gifting has the tax implications and ownership implications. So gifting backwards and forwards seems more complicated than simply buying a sharek, which means your money is yours even if tied up in a property.

Especially as the likelyhood is that mum and partner would die first, or maybe need to have paid care. Even if they have to pay a bit of rent to live in OP's half of the house, it sounds worth it.

My understanding is mum's partner is not her "husband" and not parent to OP. Not to say he is not loved and respected and to be looked after, if mum dies. But financial protection for OP seems sensible.

sloughflint

Rosie75 wrote: »

It's not so much about inheritance tax. That's unlikely to be an issue in this case. .

We do not know this.

Rosie75 wrote: »

Unlike inheritance tax, they can theoretically look at gifts that were made more than seven years previously.

HMRC will also be interested in some gifts made longer than 7 years ago ( see post 29) although perhaps not relevant to this particular situation.

The whole picture needs to be looked at properly:

Various types of tax implications
Deprivation of assets
and plain old human nature/fate.