inheritance tax

dirkstar

Hello everbody,im hoping someone may be able to help me.
My wife and i are to named in a will and i will be the main beneficiary.
The properties and assets of the will writer are off a considerable sum and she is trying to help out as best she can to keep the inheritance tax as low as possible.She has suggested that i could buy one of her houses(which at the moment has 4 self contained flats,1 being occupied)

Our question is if the property where to be valued at £150.000 for example would i be able to purchase this at a fraction of the cost .Maybe go as low as £10.000 would this be legal?

thanks P

CLAPTON

She can legally give away what she likes but the issue presumably is what the tax situation will be.

When she disposes of the flats then CGT will be potentially payable based on the market value of the property (and not your £10k purchase price)).. this is true even if she gave them to you for nothing.

The difference between the market value and the price paid will be considered a gift for IHT purposes and so if she dies within 7 years there will be IHT payable.

So the total tax bill may then be higher (i.e. IHT and CGT) that if she did nothing.

When you come to sell the properties you will be liable to CGT too.

If a considerable sum is involved here you would do well to seek professional advice.

SeniorSam

dirkstar wrote: »

Hello everbody,im hoping someone may be able to help me.
My wife and i are to named in a will and i will be the main beneficiary.
The properties and assets of the will writer are off a considerable sum and she is trying to help out as best she can to keep the inheritance tax as low as possible.She has suggested that i could buy one of her houses(which at the moment has 4 self contained flats,1 being occupied)

Our question is if the property where to be valued at £150.000 for example would i be able to purchase this at a fraction of the cost .Maybe go as low as £10.000 would this be legal?

thanks P

Dirkstar....... gifts between husband and wife are exempt from IHT.

The Will gifting to you can be changed by Deed of Variation within 2 years of death. As such, possible changes could be made so that more assets go to you or your children for example. Gifts to your children if under age 18 can be made in Trust with you and your wife as Trustees.

There are many other possibilities but additional information is needed before other considerations can be put forward and professional advice s always the best way forward.

Gifting below market value for the purposes of avoiding the correct tax is illegal and the Executor should know this and is responsible for putting the correct values in the Probate form.

The inheritance tax you refer to, is this the tax that may be on your own estate or that of the deceased?

If it's your estate she is considering for when you die, then your own Wills may need reviewing and other Trust considerations may be appropriate.

Sam