How do my family do this? (Property & IHT)

Gonzo33

I have a rather complicated question that I think I know the answer to, after reading the Inland Revenue Website, but wanted to check. To explain I need to give some background, so bear with me.


I am an only child, and my Mum is an only child. Both my Grandparents and my Parents estate will take me over the threshold for IHT. Now my Granddad is thought to be quite poorly at the moment, and my Mum and my Nan want to sort out their affairs to ensure that I am not left with a large IHT or CGT bill (morbid I know, but that is the way that they think).

We (my husband and I) will be buying property some way from my parents/grandparents and my Mum is keen to move nearer to us.

My Mum has suggested that when she makes the move, approximately 2 years as Dad will retire then, that she will buy her new property outright from the proceeds of her current home and put the house in my name. According to the I.R website if she does that it will not stop the I.R wanting their IHT tax unless my parents pay me a monthly rental at market value. They will, at that time, rent my grandmothers property.

Am I right in thinking that the only way to minimise IHT would be to inherit my Nan's home when she passes instead of my Mum? Also if that is the best thing to do is it possible to write a will in such a way that I inherit the property with the view that it be let and the proceeds be paid to my parents? Obviously we would need to look at upkeep of said property, and other considerations.

If that is the best option, would it then be better for my parents to leave their property to my children, and so on and so forth?

I am hoping that there are other options that I have overlooked. If there are can you point me in the right direction please.

somethingcorporate

This is a hugely complex area and you would massively benefit from paid for specialist legal advice.

There are ways around it but things like that don't come easily or cheap and a public internet forum is the last place to be taking advice from. It will be money well spent.

Gonzo33

I'll email my solicitor then. It is difficult because we currently live overseas (hubby is Forces) so I cannot just walk into an office and book an appointment.

CLAPTON

maybe if you provided some more information

grandparents : how old are they; how much is their estate worth approximately

your mother and father : how old are they ; how much is their estate worth approximately

you say you will be buying a property sometime soon

and your parents will sell thier current property and buy another near you

what happens to your grandparent : do they stay in their current property?

somethingcorporate

Being overseas evidently makes it a little more complex but given the benefit of getting proper advice could run to the tens if not hundreds of thousands if you get it right compared to getting it very wrong it may be a good excuse to come back to the country for a short holiday!

Given it is such a highly specialised area you may want to pick a solicitor wisely rather than go with the one you are used to. You really need to work with a tax specialist and the good ones tend to be few and far between.

CLAPTON

somethingcorporate wrote: »

Being overseas evidently makes it a little more complex but given the benefit of getting proper advice could run to the tens if not hundreds of thousands if you get it right compared to getting it very wrong it may be a good excuse to come back to the country for a short holiday!

Given it is such a highly specialised area you may want to pick a solicitor wisely rather than go with the one you are used to. You really need to work with a tax specialist and the good ones tend to be few and far between.

as stated to date the IHT and cgt issues seem quite straight foreward
there appears to be no businesses involved or agricutural land or trusts or anything complicated
in fact simply an ordinary person leaving the normal sort of possessions and property.

professional help may be useful but most people sort this sort of thing out for themselves

however a fuller pricture is required

lincroft1710

Your mother will probably live for at least another 20/25 years. Over that period of time she could spend some of her inheritance, and the tax rates are bound to change.

ceeforcat

My Mum has suggested that when she makes the move, approximately 2 years as Dad will retire then, that she will buy her new property outright from the proceeds of her current home and put the house in my name. According to the I.R website if she does that it will not stop the I.R wanting their IHT tax unless my parents pay me a monthly rental at market value. They will, at that time, rent my grandmothers property.

You are correct on the IHT front. However, you should also be aware that, as the house is in your name, you will be also liable to CGT on any gain that you make. In effect the house could end up being subject to two taxes, IHT and CGT, as opposed to none.

getmore4less

With the transferable nil rate band you have upto £650k to transfer at each pair of deaths.

It is usualy failry easy to account for normal life spans since you get time between each death to adjust wills.

There is also the use of 7 years PETs(gifts) to try to make adjustments.

gifts with reservations are best avoided.

It is the unexpected and multiple deaths that cause issues with untimely inheritances.

You have to look at multiple senarioes especialy where you travel together.

If the kids are under 18 you will be looking at trusts for the generation skip.