Inheritance Tax

nichos_2

We are wife 70 & me 78 with a Will made in UK.

Morgages paid up.

We want to lessen the IHT paid after our deaths.

House valued today over £650k.

Can we give halve the house to our unmarried 40yr daughter?

She leaves in her own paid up cottage.

And we mean not sell, give or put her name as halve owner, & how to do it?

thanx ........nick

DarkConvict

As your married, the threshold will be the both of you, so you have £650,000 limit anyway.

In terms of gifting the house my mom considered this. One issue was you may have to pay rent to the other owner (not sure why), secondly it takes 7 years for the asset to be free of been included in the estate.

CLAPTON

in general if you give part of all of your house to your daughter and continue to live there then the IHT rules will say that is a gift with reservation and so full IHT will be still payable on your deaths.

Even worse is that any increase in the value of the house will mean your daughter will be liable to capital gains tax too.... so a lose lose situation.

you can get round the gift with reservation rule if you pay your daughter a full commercial rent.

RayWolfe

CLAPTON wrote: »

you can get round the gift with reservation rule if you pay your daughter a full commercial rent.

... and pay tax on that rental income.

John_Pierpoint

We really do need a full list of the value of EVERYTHING you own before we can comment.
There is a 7 year rule about giving things away before you die, with the exception of 3,000 a year plus gifts out of spare income (if you have any). So you could transfer (say) investments of this value to your daughter and (say) pay her credit card bill each month.

This topic really is complicated.

I have found the "Which" books called "Wills & Probate" & "Giving & Inheriting" a good introduction BUT the latter has not (yet?) been updated for the transferable nil rate band of tax introduced in the Autumn of 2007.

It is almost impossible to find a comprehensive up to date source of information on Inheritance Tax and beware of expensive advice that will give you a supposed solution BUT will not be kept up to date as the rules change.

I have just put "Inheritance tax" into UK Google and I got this result:

About 1,130,000 results (0.18 seconds)

That is some reading matter for insomniacs - unfortunately most of it will be out of date
as major changes were made in 2006 followed up by the transferable allowance in 2007.

.

tyllwyd

If you have a house worth over £650K plus I assume other assets, you have a substantial estate - surely enough that the best way forward is to get some professional advice from a solicitor, not rely on advice from an internet forum. People here can have some good advice & different ways of approaching the issue, but a good solicitor can look at your situation as a whole & take everything into account.

John_Pierpoint

I wish I could agree, but there are financial advisers who are probably better able to advise on tax matters and financial planning.
For example BDO Stoy Hayward (Chartered Accountants) have published a paper back called "Inheritance Tax & Wealth Planning."
There are also solicitors who are not up to the job - If you read my postings about Mr Dog you will find a perfect example of a solicitor written will that is faulty.
In the rest if the forum, you will find threads sorting out muddle and mess created by so called professionals and a whole bunch of charlatans pretending to offer a professional service to people in your situation.
You need to know the basics before you talk to anyone (unless you want to pay hundreds of pounds per hour to a solicitor for a private tutorial)..

https://forums.moneysavingexpert.com/discussion/1120993

There are articles on the main site and they interface with threads on this forum.

https://forums.moneysavingexpert.com/discussion/487549

Beware of the offer of a cheap will that names the "professional" organisation as you executor. Typical charges resulting from such an arrangement can be 2% of everything you own and expensive conveyancing when your house is sold. (That is probably cheap compared with allowing you bank to do the job)

Remember anything written before Christmas 2007, might refer to the old rules, before Gordon Brown chickened out of calling an election. because he needed to change the rules in response to a Tory proposal to do so.
(As a result of those changes lots of people had to get their wills re-written).

Fire_Fox

Why not leave some of your estate to a charitable organisation? I believe this can be a tax-free gift and clearly your daughter doesn't need more than £650K if she is already a homeowner.

margaretclare

Just how do you give half of a house? And what happens to the other half?

John_Pierpoint

Obviously the house would need to be sold.
Bringing in a charity adds another level of complexity to the administration of the will. The charity's solicitor will want to get in on the act, to make sure that the IHT that the charity can avoid on it's half, does not get paid. (Google for details)
Having a property in multiple ownership probably allows you to devalue its probate value by 10%

Nosht

Go for an Asset Trust & use a lawyer, accountant & will writer specialising in such matters.


N.