What issue arise from buying out parent's house?

lightSwitch_3

THanks guys, it seems that even when buying out your parents at market value there are still be issues with IHT that need to be considered.

BitterAndTwisted

Yep, it seems that HMG have thought of every eventuality to ensure taxes are paid correctly. And that's as it should be imo

elfen

Isn't there something about a 7 year threshold with IHT and CGT, i.e. if it's been over 7 years and your mother passes away, then there would be no CGT/IHT liability....Or am I talking out my bum?

lightSwitch_3

elfen,

I think CGT is always on the cards.
You get seven years with IHT from the moment of transfer as long as the paper work and title is done correctly otherwise seven years down the line you find out that a detail was missed and you have to start those seven years again if parent is still alive!

BitterSweet,

IHT has been done away with by many countries poorer than the UK. If you want to tax someone at 40 bloody percent do it on banker bonuses and say a small fraction of corporate profits. They only get about 20% taxed, levy 40% tax of 10% of profits above say £500,000,000.

00ec25

elfen wrote: »

Isn't there something about a 7 year threshold with IHT and CGT, i.e. if it's been over 7 years and your mother passes away, then there would be no CGT/IHT liability....Or am I talking out my bum?

your are in principle correct with respect to IHT only (there is no 7 year rule re CGT),

however, you have not understood that where the assets in question have been given away as a gift in reservation then the 7 year period never started, as the asset was never in effect given away by the person who continues to benefit from its use and so it remains within the estate at date of death, eg they live there (market) rent free until death whereupon the house forms part of the estate even if "signed over" to someone else