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

Mojisola

SeniorSam wrote: »

Actually putting half the house in Trust when the first one dies is not such a good idea. It can complicate matters if there is a house move and may attract capital gains tax on the growth when the second one dies.

A well written will should have details of what happens if the survivor wants to downsize.

GCT wouldn't be an issue.

CPTGREG

Hi,

I have an Inheritance Tax Query please ?

I wish to give my flat to my son as a 'lifetime gift' and then permanently move abroad to live with my sister. My son would then move into this flat as his main residence.

I understand, that if I continue to live for 7 years or more, my son would not have to pay any inheritance tax on the flat.

However, If I was to die any sooner, I understand that my son would be liable to pay Inheritance Tax. My question is a s follows:

On what date would the value of my flat be calculated for the purpose of Inheritance Tax ?

- would it be on the date when I give the flat to my son ?
- or would it be on the date when I die ?
- or if my son decided to sell the flat next year for example (before I die), would it be on the date he sells the flat ?

Also, would my son be able to sell the flat before the 7-year deadline expires and would that affect the inheritance tax liability ? (if I lived for 7 years or longer)

Thank you

SeniorSam

I have PM'd yopu with the answer

Sam

CPTGREG

Hi Sam,

[FONT=Arial, Helvetica, sans-serif]Thank you for your response, you ar every kind.

So just to confirm, for inheritance tax purposes, my flat would be valued when I die and not on the day when I gift it to my son ?


The following is exactly what I would like to do:

I live in a Victorian Terraced house, which many years ago has been converted into two self-contained flats (ground floor flat and 1st floor flat). Both flats have separate entries in the Land Registry, as two separate self-contained properties.

I own the 1st floor flat and it is and has been my main and my only residence for the past 20 years
My son owns the ground floor flat and it is and has been his main and his only residence for the past 15 years

The house has a single shared external front door entrance which leads into a small corridoor, which leads to two separate internal front doors (one for each of the self-contained flats).

I am a pensioner and I have decided to spend my remaining years with my only sister who lives abroad and has kindly offered to take me in. After that I won't be coming back to live in the UK.

Before I go, I wish to gift my flat to my son, so that if I survive for another 7 years, he wouldn't have to pay any inheritance tax on it.

Once I gift the flat to my son, he would then convert the two flats back into a single terraced house (single property) and live in it as his main and his only residence.

If all of the above is done as described would either myself or my son have any tax liability on the flats ?

Also, if my son then decides to sell the whole house in 10 years time for example, would he have to pay any tax on the sale ?


Many thanks
Greg [/FONT]

zygurat789

CPTGREG wrote: »

Hi Sam,

[FONT=Arial, Helvetica, sans-serif]Thank you for your response, you ar every kind.

So just to confirm, for inheritance tax purposes, my flat would be valued when I die and not on the day when I gift it to my son ?


The following is exactly what I would like to do:

I live in a Victorian Terraced house, which many years ago has been converted into two self-contained flats (ground floor flat and 1st floor flat). Both flats have separate entries in the Land Registry, as two separate self-contained properties.

I own the 1st floor flat and it is and has been my main and my only residence for the past 20 years
My son owns the ground floor flat and it is and has been his main and his only residence for the past 15 years

The house has a single shared external front door entrance which leads into a small corridoor, which leads to two separate internal front doors (one for each of the self-contained flats).

I am a pensioner and I have decided to spend my remaining years with my only sister who lives abroad and has kindly offered to take me in. After that I won't be coming back to live in the UK.

Before I go, I wish to gift my flat to my son, so that if I survive for another 7 years, he wouldn't have to pay any inheritance tax on it.

Once I gift the flat to my son, he would then convert the two flats back into a single terraced house (single property) and live in it as his main and his only residence.

]If all of the above is done as described would either myself or my son have any tax liability on the flats ?

Also, if my son then decides to sell the whole house in 10 years time for example, would he have to pay any tax on the sale ?


Many thanks
Greg [/FONT]

When you die you may be subject to the death taxes of another country, not UK.

zygurat789

CPTGREG wrote: »

Hi Sam,

[FONT=Arial, Helvetica, sans-serif]Thank you for your response, you ar every kind.

So just to confirm, for inheritance tax purposes, my flat would be valued when I die and not on the day when I gift it to my son ?


The following is exactly what I would like to do:

I live in a Victorian Terraced house, which many years ago has been converted into two self-contained flats (ground floor flat and 1st floor flat). Both flats have separate entries in the Land Registry, as two separate self-contained properties.

I own the 1st floor flat and it is and has been my main and my only residence for the past 20 years
My son owns the ground floor flat and it is and has been his main and his only residence for the past 15 years

The house has a single shared external front door entrance which leads into a small corridoor, which leads to two separate internal front doors (one for each of the self-contained flats).

I am a pensioner and I have decided to spend my remaining years with my only sister who lives abroad and has kindly offered to take me in. After that I won't be coming back to live in the UK.

Before I go, I wish to gift my flat to my son, so that if I survive for another 7 years, he wouldn't have to pay any inheritance tax on it

Once I gift the flat to my son, he would then convert the two flats back into a single terraced house (single property) and live in it as his main and his only residence.

If all of the above is done as described would either myself or my son have any tax liability on the flats ?

Also, if my son then decides to sell the whole house in 10 years time for example, would he have to pay any tax on the sale ?


Many thanks
Greg [/FONT]

When you die you may be subject to the death taxes of another country, not UK.

getmore4less

The problem with answers in PMs is no way for other posters to check them and comment.

This needs multi country knowledge as there may ne better ways to deal with this depending where you move too.

SeniorSam

getmore4less wrote: »

The problem with answers in PMs is no way for other posters to check them and comment.

This needs multi country knowledge as there may ne better ways to deal with this depending where you move too.

I sent a PM because I received a PM from the OP. If someone chooses that route, it would be wrong of me to reply otherwise.

Sam

CPTGREG

Thank you all for very valuable advice. Much appreciated. let's hope the taxman doesn't get any inhertitance tax from me :-)

uknick

CPTGREG wrote: »

Thank you all for very valuable advice. Much appreciated. let's hope the taxman doesn't get any inhertitance tax from me :-)

Easiest way to ensure no IHT is paid is to spend everything above the NRB before you pass away, or, if the rules don't change, leave anything above the NRB to charity in your will.