Inheritance Tax?

Paul2069

My wifes brother still lives with their mother in the family home. He wants to take out a mortgage and buy the house now. My wifes mother says she will then divide up the money between the 3 sisters and give them their share of the money now instead of when she dies.
The money will be around £15000 each. Will we be liable for tax on this money or will it be classed as inheritance money as long as her mother lives 7 years?

CLAPTON

the money is tax free at the time of the gift

however if the mother dies within 7 years and her estate including theses gifts is more than the inheritance tax llimit (currently 325,000 or 650,000 if her estate can use her husbands allowance too) then the estate will be liable to IHT.
usually any tax is paid from the estate rather than the gifts but that may depend upon the will

Mojisola

Paul2069 wrote: »

My wifes brother still lives with their mother in the family home. He wants to take out a mortgage and buy the house now. My wifes mother says she will then divide up the money between the 3 sisters and give them their share of the money now instead of when she dies.

What's going to happen to his share? Is he buying the house at a reduced rate or is she going to keep his share until she dies? If so, it may have to be used on care for her if she ever needs it.

Also, read up on "deprivation of capital". If she gives away money now, she may find herself unable to pay for care later on and unable to claim means-tested benefits.

Paul2069

CLAPTON wrote: »

the money is tax free at the time of the gift

however if the mother dies within 7 years and her estate including theses gifts is more than the inheritance tax llimit (currently 325,000 or 650,000 if her estate can use her husbands allowance too) then the estate will be liable to IHT.
usually any tax is paid from the estate rather than the gifts but that may depend upon the will

Thanks very much that was my thoughts

Paul2069

Mojisola wrote: »

What's going to happen to his share? Is he buying the house at a reduced rate or is she going to keep his share until she dies? If so, it may have to be used on care for her if she ever needs it.

Also, read up on "deprivation of capital". If she gives away money now, she may find herself unable to pay for care later on and unable to claim means-tested benefits.

Thanks for that he will get his share to pay directly off his mortgage but I'll have a look at the other you mention thanks again:T