Gifted Deposit - Inheritance Tax?

MentalMinnie

00ec25 wrote: »

the 7 year thing does not apply to your granny based on the info you provide

if granny makes a gift to you and dies within 7 years of the date of the gift the value of the gift is added back into her estate when calculating the total value of said estate.

If the estate total is then more than £325,000 (OR £650,000 depending on what happened to granddad's money) then inheritance tax would be payable. If less, then IHT is not payable and the whole thing is irrelevant

if the estate is above that threshold and granny dies within 7 years then there is a sliding scale covering how much of the gift is added back into the estate meaning that after year 7 all of the gift is exempt, this is why its called a Potentially Exempt Transfer (PET)

it was all explained on the link if you read it

since you say that MIL (granny) Is already in a nursing home then I'd be more concerned about the deprivation of capital rules than worry over IHT. If MIL is still able to manage her own financial affairs then so be it, she has taken the decision to give away some money but if at a future date she can no longer afford to pay the care home fees herself then the fact she gave away her own money whilst already in care is a cast iron certain deprivation of capital

if MIL is senile and someone else has given you this money under a power of attorney then that person is potentially liable for serious repercussions since it would not be in the best interest of MIL to give you her money

Granny didn't gift the money to us. I've just found out that her house has been in my MIL name, and had been for nearly 20 years, til it was sold. My MIL then split the proceeds between herself and her siblings. She's then gifted us this money.

getmore4less

MentalMinnie wrote: »

Granny didn't gift the money to us. I've just found out that her house has been in my MIL name, and had been for nearly 20 years, til it was sold. My MIL then split the proceeds between herself and her siblings. She's then gifted us this money.

If MIL did not live in the place there would need to have beenn a CGT assessment

MentalMinnie

getmore4less wrote: »

If MIL did not live in the place there would need to have beenn a CGT assessment

There was.

Mattygroves2

The seven year rule applies to your MIL ie. definitely no tax if she lives 7 years and probably none if she dies within that time dependent on other factors.

getmore4less

Mattygroves2 wrote: »

The seven year rule applies to your MIL ie. definitely no tax if she lives 7 years and probably none if she dies within that time dependent on other factors.

If this is the first set of PETS(distribution of house proceeds and deposit) the total would have to be over £325k. under that almost impossible to suffer IHT on the gifts.