House in son's names, is it exempt from inheritance tax?

margaretclare

cj500 wrote:

My parents live in a property (since 1986) which is now worth around £500,000 , when i told them that inheritance tax might be an issue when they pass on, they told me not to worry it had been sorted because they had put the house in my name since 1990. Which obviously means i own the property. But i thought that if my parents still live at this address then the value of the house would still be subject to inheritance tax? is this wrong? Any ideas, thanks

Oh, isn't this typical of those half-assed ideas that float around. Call it pub talk, urban myth, whatever - a lot of otherwise intelligent and well-informed people seem to go off at half !!!! and the end result is likely to be not what they expect and turns out to be very expensive!

Obviously when Mum and Dad bought the house in 1986 its value was far less than half-a-million quid, and they obviously didn't foresee the crazy prices that are around now - none of us did. And they've had an idea of saving their son or daughter future problems, but they've gone about it completely the wrong way. This question crops up time and again on these boards, and eldewhere - 'can mum or dad transfer their house title to me and thereby save IHT/CGT or the house being sold for their care?' No, under present legislation, is the answer every time. As has been pointed out, mum and dad have to pay an economic rent and son or daughter has to declare that for tax purposes. They have you by the proverbial short and curlies!

Margaret Clare

Tiggs_2

oh, and watch out for CGT if you sell it as its not your primary residence

talksalot81

The real fear with this approach is it means that, in the case of a failed marriage and divorce, the house will be considered within the assets of the marriage. So were you to happen to be in this boat and your parents still alive, it is feasible your wife could demand part of the house.... save for a prenupt. This is the reason we have not used this approach.