Elderly mother and IHT issues

Benbom

Back in 2005 my partner and I returned from overseas to be closer to my elderly mother. At this time she gifted her almost derelict house to us and she moved into a rental property nearby. We spent £200k on the property to make it safe and to renovate it. Then 3 years ago my mum was diagnosed with Alzheimer's as well as going deaf and blind, so we felt our only option was to sell our house and buy a big enough property for us all, bearing in mind we by this time had 3 young children. So in Mar 2010 my mother moved into the new property we had purchased with the proceeds of the property she had gifted to us, now having read up on IHT I get the impression that this will be seen as her benefitting from a previously made gift. Will the gift now have to be taken into consideration for IHT purposes?

Thanks in advance

xylophone

http://www.taxguide.co.uk/content/pre-owned-assets-tax-know-legislation
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
might be relevant?

getmore4less

Is it lilkely to be over the nill rate band £325k

Is there any transferable nill rate band available, might give you upto £650k

atush

Dont' forget as you got the house derelict, it would be based on that value at the time, less the money you put into renovation and the %of rise associated with that investment. So, fairly lengthy calculations needed to ascertain the 'gift' and the capital gain as it won't be straightforward.