Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

MrConfused

Going back to my original thread....

guys Im really confused on this situation. Can anyone suggest the best route and if we can avoid stamp duty, and my mother can avoid CGT.

House worth £475k
We are being gifted the house
We are then in 6 months going to remortgage it for £260k, £225k to my mother the remainder £35k is for us to do the house up) which I've been told would all have to go back to my mother, as £260k.

For stamp duty I believe we are better off having the full property being gifted, but this then creates a CGT position for my mother doesnt it? She bought the house in 1986 for approx £80k
If we remortgage for £260k, do we have any stamp to pay?
Are there any other liabilities/tax implications we need to take into acconut, I dont want a nasty tax situ to kick in in say 10 years time that we missed!
Understand the 7 year gifting IHT rule, so thats fine.

Mary_Hartnell

If you create your own thread on the "tax saving" subset of this forum, flagging it up as a CGT/IHT/Stamp Duty challenge one of the experts on: how-to-sell-part-of-your-garden-for-a-fortune-as-a-building-plot will probably have some ideas; you might even get half a dozen experts arguing with each other.

Babsk

My recently deceased mother in law had joint bank accounts ( for convenience) with my husband, The probate form wanted to know if they were 100% funded (yes) by mother in law as they formed part of her estate (< than threshold) However. the accounts are now in my husbands name and as executor he has to share the contents of the accounts with his brother as both are beneficiaries.
We have been told that this transfer of money (£100,000) to his brother will be classed as a gift from my husbands estate if he or both of us should die (heaven forbid) within 7 years as the money from the joint accounts take our total assets above the threshold.
Has anyone had experience of these bank accounts of convenience and the subsequent problems or can he transfer the money to his brother as part of the estate and not increase our liability
Thanks

John_Pierpoint

I would say that joint owner ship of the asset means that each signatory holds as trustee for the survivor, what ever it says in the will.
So your husband did indeed inherit all 200,000 in the account, regardless of what it says in the will.
However might your husband have documentation to prove he was holding all the money with (say) power of attorney on behalf of his mother? I made myself "authorised signatory" on my late mother's account - a lot more convenient and trouble free than trying to organise a joint account, under a power of attorney arrangement, even though I did hold a PoA/Enduring Power of Attorney.
Alternatively does the estate own something else worth 200K that could be assigned to brother in law by creating "an instrument of variation", to change the will, within 2 years of the death?

I am no lawyer, so I just make these remarks, in the hope of stimulating further comment from other posters.

Simon18

Hi All,

This is my first posting, so hopefully it will be ok.

My farther passed away early this year and my mam had passed away a couple of year earlier. So I was left the family home and made executor of the will. I tried to sell the property but in the current market it's not easy.
What I am planning to do (due to thier house being bigger than my own house). Is move into my mam and dad's house for 4 or 5 years until the market picks up and rent out my own house during this period. The question is, if I do this do I lose my inheritance tax exemption from my mam and dad or would this carry forward to when I sell the property? Or is they another way other than sell the house ?

Any help or advise would be greatly appreciated

getmore4less

Have you applied for probate and filled in the IHT forms yet?

Who did your mums estate? you may need the accounts.

How much is the estate worth?

You don't have to sell the house to inherit the estate.

any other benifitiaries? that may complicate things


Have you read some basic books on managing estates and beng an executor,, there are pleny avaialble in the library

Simon18

Hi getmore4less,

My mams estate just moved to my Dad. The estate is worth around 290k. No other benifitiaries. I have read a few but not that deal with this area.
I do understand I don't need to sell the house to inhert the estate. What I did'nt want to do is transfer my mam and dad's house into my name then when I come to sell it in 4 to 5 years time pay tax on the sale of the house, as I would still have my own house. Is it possible to avoid paying this tax ? Could I move into the property leave the deeds as is, then sell the property in 4 to 5 years? How long do you have to sort out someone estate is thier a time limit on this ?

cheers

Simon

getmore4less

You need to look at CGT not IHT which is asessed at Date of Death(DoD)

You can't avoid a CGT assesment on one/both of the properties at some point, there are ways to mitigate the liability of CGT tax.

From DoD the estate potentialy becomes liable for CGT just like a person so leaving the house in the estate does not get round this.

Have you started the process, you need probate(to sell or transfer the house) and this will set the starting value for any CGT assesments.

John_Pierpoint

When there is an estate, it is a trust and the executor is the trustee.
Presumably you are worrying about possible future capital gains tax on the difference between the value at the date of death and the net value of the cash after the sale.

Trusts only get half the CGT nil rate band available to individuals.
You night well need to put the house into your name before selling it, or at least "assign" it to you as an individual with the executor holding the legal title as your bare trustee.

If you move into dad's old home, you should have up to three years in which to sell your previous principle private residence, without starting to run up a CGT liability.

Simon18

Hi John and getmore4less,

Thank you for your replies,

I have started probate and been advised by the tax office that as long at the estate is settle for less than 290k I don't have to do any esle or than inform them once it is finalised.

John, just to confirm that I understand right, if I move into my dad's old home I can sell my own home within the next three years without paying any CGT on this property, after this time would normal CGT apply ?

One final point by me moving into my dad's property do I therefore forfit the IHT relief ?

Thanks again for all your