Inheritance Tax Article MoneySavingExpert.com Discussion

Andy_L

It would be best for her to spend the amount she is over the IHT limit on herself

hostie

Hello, i wonder i anyone can help me.
My dad is widowed and has two properties. He has one house which he lives in and another which he rents out. Both are mortgage free. He was thinking that if he changed the one that is rented out into my name now that it would bring things under the inheritance tax threshold.

I have been managing the property for him for ten years anyway and we have a joint bank account into which the tennants pay their rent. (Dad spends the money though as it is his not mine! ) We think that if he wants to give it to me that I would have to buy it at the market price. Is that correct? Is there any other way around it.
Any advice gratefully received.
Thanks.

Andy_L

If he gives it to you he would have to survive 7 years for it to be exempt of IHT. If he continued to take the rent himself it would never be exempt from IHT as it would be a "gift with reservations"

If you but it from him (at market price) the house will not be subject to IHT, although the value of his estate has gone up by the sale price so not much has been gained - although he than has cash to spend or slowly gift to you IHYT free

With 2 paid up houses you really need professional advice (assuming the combined vale is over the IHT threshold - depends where in the country they are)

CHcD

I hope someone can help me with some queries I have regarding Inheritance tax and Pre Owned Asset tax.

I had a joint mortgage with my elderly mother on our property, which has now been paid off, and the deeds transferred to my name in 2003. My mother currently has sole occupancy, rent free. Although the value of the property and the rest of the estate falls below the current threshold of Inheritance Tax, as far as I can tell, I’m rather uncertain as to whether Pre Owned Asset tax might apply in this case as the Inland Revenue may regard her living there rent free as a benefit.

Should I be charging her rent and if so, can it be a nominal sum or does it have to be appropriate for the market value of the property?

Many thanks
ChcD

rocky.rita

[Need advice, just divorced and waiting for finacial settlement. After sale of marital home need to know whether it would be better to invest in a property or place monies from sale into isa's or other investments. Need to know finacial settlement is secure for my future.

Freddie-M

My mum and dad are really worried about the inheritance tax thing and have asked me to look into it for them. I have spent the morning reading through the thread and found a lot of advice, but some of it conflicting and a lot of it confusing! Can anybody give me some straightforward advice?
Mum and Dad are both in their 70s. They own their house outright, and have total assets of about £550k (at todays market value), most of which is the value of the house. They are currently joint owners and they have 3 children.
They gave me some literature that they sent away for about "how we can save you thousands in IHT" but I am worried that this might be along the lines of "have you had an accident......" type marketing as there seem to be a lot of companies jumping on this bandwagon. Having "googled" one of the companies, I found that anyone can buy a franchise and attend a 5 day course. Surely you must need more experience than this to know the way around the legal minefields!
Thank you.

RayWolfe

Tell them not to worry.
So much hype around IHT and you can help by telling them that when they die they can be helping the state as well as their children.

RayWolfe

Sorry, but I disagree. The best tax of all is one you pay when you're dead ... I promise, you don't feel a thing.
And, if you think I'm being flippant, tell me how much extra those same people have to pay to make up the shortfall that abolition of IHT will cause?
Of course people don't enjoy paying taxes but if we want services, they have to be paid for.

RayWolfe

So vote for someone else. Stand yourself .... but don't forget that your waste is someone else's sensible spend.
And don't get carried away with the Daily Mail line that Government is simple.

RayWolfe

Why are YOUR ideas always the better ones?
My original point was that the OPs parents were "worried". All I said was don't worry, it is the media that have hyped IHT as THE ISSUE. IHT is a good tax, nothing to worry about and is less today than it has been at many times in history.
Finally, it's amazing that you think every one's money is "hard earned". I bought my house for 12,000 quid in 1974, it's now worth £550,000. Is the difference between those two amounts hard earned, or the 22% I got on my shares last year?
As for me paying tax; I am happy to do so and to receive the benefits of living in this country.